Nigeria-bound vessels pay $620m war-risk insurance premium

•NIMASA accuses international cartel of ‘rigging’ premium calculation against Nigeria

The Nigerian Maritime Administration and Safety Agency (NIMASA) has alleged that the continuous high war-risk premium imposed on vessels operating in Nigeria has continued due to the influence of the international insurance sector cartel despite the easing in piracy on the country’s waterways.

This comes as Nigeria-bound vessels are said to have paid an estimated $620 million on war-risk insurance premiums from 2020 to 2023.

War-risk premium covers damage due to acts of war, invasion, insurrection, rebellion and hijacking.

In 2023, the International Bargaining Forum (IBF) delisted Nigeria from the countries designated as risky maritime nations following significant progress ant-piracy war on Nigerian waters and the Gulf of Guinea (GoG) and the declaration of the country as piracy-free by the International Maritime Bureau (IMB).

The Director-General of NIMASA, Dr Dayo Mobereola, at a media parley yesterday in Lagos, said that despite the improvements in maritime security, the cartel continues to push for higher premiums to add to the cost of trade for Nigeria.

He argued that these premiums, which significantly elevate freight costs for imports and exports, are being artificially sustained by insurers, who are well aware of the improved security situation but prefer to maintain the high charges to maximise profits.

The Guardian found that Nigeria-bound vessels transiting the Gulf of Guinea paid an additional war risk premium of $55 million, while 35 per cent of the vessels also carried additional kidnap and ransom insurance of about $100 million, with the total cost standing at $155 million yearly.

The figures were stated in the 2020 report of the Oceans Beyond Piracy (OBP), while checks showed that the total amount paid from 2020 till 2023 totalled $620 million.

Mobereola noted that the war risk premium has not seen a corresponding decrease.

He said the development underlines the need for a coordinated international effort to address the issue, noting that NIMASA has initiated discussions with key international partners and also taking the matter to the United Nations.

Mobereola highlighted the need for Nigeria to collaborate with global maritime organisations to tackle the entrenched practices, pointing out that the premium is not determined by the actual risk level but by a cartel profiting from the status quo.

“Even if we have zero piracy and no security incidents for the next 10 years and we don’t force the issue, they will continue to charge us. In all honesty, Nigeria alone cannot do it. We need international maritime organisations to be with us.

He stressed that with the backing of the UN and other international stakeholders, Nigeria would be in a stronger position to challenge the insurers, forcing them to adjust the premiums in line with the actual risk.