At an event in 2023, a former Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), Barr. Temisan Omatseye came out boldly to query the justification for the payment of the controversial War Risk Insurance premium on goods destined for Nigeria.
While describing the administration of the war risk premiums in shipping, as the biggest fraud in the world, Omatseye had revealed that as at 2010, Nigeria was paying about $ 400 million annually for this insurance, but there were no recorded claims to validate the insurance premium.
He added that people just sit in Lloyd’s of London and the Joint War Risk Committee to collect these monies, yet the rates levied on Nigeria was about four times the rates charged on vessels going to the war-torn Afghanistan in 2010 when he was still in office.
The war risk insurance is a type of insurance that covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. It has two components: war risk liability, which covers people and items inside the craft and is calculated based on the indemnity amount, and war risk hull, which covers the craft itself and is calculated based on the value of the craft. The premium varies based on the expected stability of the countries to which the vessel will travel.
The war risk phenomenon, which was only known to countries with high rate of piracy such as Somalia, however found its way into Nigeria during the massive involvement of youths of the Niger Delta in militant activities.
Since its introduction, Nigeria has been paying the contentious premium, even when attacks on ships have evidently stopped.
While both the headship of NIMASA and the Nigerian Navy continue to claim falsely that Nigeria has been exited from the ignominious list, available facts have confirmed that cargoes destined for the Nigeria and most part of the Gulf of Guinea still pay the War Risk Insurance.
Statistics have shown that, despite significant progress in reducing piracy on Nigerian waters and the Gulf of Guinea in general, Nigeria has continued to pay.
It is shameful that, while importers have continued to pay the premium, government officials have been living in denial.
We recall that, in 2023, the Nigeria Maritime Administration and Safety Agency issued a statement in which it announced that Nigeria has been removed from the list of countries designated as risky maritime nations by the International Bargaining Forum (IBF).
In the statement, the agency had said the development was “a confirmation of the improved global ratings of security in Nigerian maritime domain as a result of sustained collaborative efforts of the Nigerian Maritime Administration and Safety Agency and the Nigerian Navy”.
Apart from NIMASA, the then-Chief of Naval Staff, Vice Admiral Awwal Gambo had also claimed that Nigeria has been removed from the list of countries paying War Insurance Premium on ships whose destination is Nigeria, by Lloyds of London, United Kingdom.
Sadly, a visit to the Lloyds website did not reveal that there is any change on the list. In Africa, Nigeria is still number One on the list. Other countries on the list in Africa are: Somalia, Libya, and Benin Republic.
However, the strings of denials appear to have been broken when the incumbent Director General of NIMASA; Dr Dayo Mobereola, at a recent stakeholders’ engagement said that the agency would be engaging foreign insurance companies to tackle the issue of war risk insurance placed on Nigeria- bound cargoes. Mobereola expressed confidence that engagement with the insurance firm would yield positive results. “Of course, we want the maritime space to be clean, safe, and, most importantly, secure”, he had affirmed.
We are also emboldened when he said, not long after the first meeting with stakeholders that Nigeria has recorded 24 months of zero piracy in its continental shelf.
We agree with him that, the zero-occurrence feat ought to ensure that the higher insurance rates on vessels coming to Nigeria’s continental area as War Risk Insurance is removed.
There is no doubt that there are still pockets of incidences on Nigeria waterways, but they are not piracy-related.
The partnership between the Nigerian Navy and NIMASA for the purpose of ensuring that Nigerian waters are safer is working effectively. This has resulted in the trail and conviction of alleged pirates and sea robbers, under the Suppression of Piracy and Other Maritime Offences (SPOMO) Act 2019.
Apart from the SPOMO Act, there tangible investments in assets by NIMASA, sufficient to fight piracy.
The SPOMO Act provides a comprehensive legal framework for addressing maritime insecurities, empowering law enforcement agencies to investigate, prosecute, and punish perpetrators of maritime crimes and other related offenses. Its enactment has greatly changed the narrative as regards piracy in Nigeria.
It is therefore worrisome that, with all that Nigeria has done in the fight against piracy and other maritime crimes, her imports are still subjected to payment war risks premium.
There is manifest disconnect between Nigeria and ships coming into the country. Put more succinctly, there is no fact-checking mechanism between NIMASA and ship calling at our waters. Otherwise, why would the ships still designate our ports as being Security Level 2, whereas NIMASA has designated such ports as being on Security Level 1; being the lowest threat level, indicating a relatively safe environment.
This ambiguity was recently confirmed to this newspaper by none other the President of the Nigerian Association of Master Mariners (NAMM), Captain Tajudeen Alao. He said: “Shipping is an integral part of international trade. The international community relies on specific indicators to assess insurance and war risk premiums, rather than local information. Yes, I am aware that some ships calling at our ports declare Security Level 2 as opposed to Security Level 1 declared by the Designated Authority, NIMASA. As far as we are concerned, our waters are relatively safe, hence the declaration of SL 1 at all our ports.”
We are of a strong opinion that NIMASA should as a matter of national interest and urgency engage with relevant international shipping bodies, with facts about Nigeria’s feat and current rating in the war against piracy.
By its description, the areas affected by the premium are according to Lloyds of London: 1-On the northern side the coast of Benin, Togo and Nigeria, 2 – On the western side a straight line from the border on the coast, of Togo and Ghana to position Latitude 3° North, Longitude 1° 10’ East. 3- On the southern side a straight line from there to position Latitude 3° North, Longitude 8° East. 4- On the eastern side a straight line from there to Latitude 4° North, Longitude 8° 31’ East and then from there to the border, on the coast, of Nigeria and Cameroon.
The approaches and water channels to Nigeria are safe, so also are our ports. Therefore, continuous payment of War Riks Insurance premium is fraud and a disservice to both NIMASA and the Nigerian Navy.
To the best of our knowledge, the above coordinates do not reflect the facts about the situation in Nigeria.
