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 dropped or out rightly stopped.
We recall that, in 2023, the Nigeria Maritime Administration and Safety Agency (NIMASA) 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”.
But, there is a difference between the War Risk Insurance and the International Bargaining Forum, and the former is what Nigeria is facing its sanctions.
Apart from NIMASA, the then-Chief of Naval Staff, Vice Admiral Awwal Gambo had also claimed that Nigeria had 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.
Even though Nigerian officials have continued to live in denial, the current DG of NIMASA; Dr Dayo Mobereola has come out boldly to admit that cargoes destined for Nigeria are still paying the premium. He talked about further engagements with foreign insurance companies to tackle the issue of war risk insurance placed on Nigeria- bound cargoes.
The truth is that, Nigeria has recorded a near-zero piracy incident-free years in its continental shelf. The zero-occurrence feat ought to ensure that the high insurance rates on vessels coming to Nigeria’s continental area classified 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 trial and conviction of alleged pirates and sea robbers, under the Suppression of Piracy and Other Maritime Offences (SPOMO) Act 2019.
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.
Apart from the SPOMO Act, there tangible investments in assets by NIMASA, sufficient to fight piracy.
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 of 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 had been 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 Security Level 1 at all our ports.”
While we commend NIMASA for the recent efforts of its DG, we are of a strong opinion that NIMASA should as a matter of national interest and urgency intensify its engagement with relevant international shipping bodies, with facts about Nigeria’s feat and current rating in the war against piracy.
According to NIMASA, Nigeria has paid over $1.5 billion in the past three years alone to Lloyd’s of London, Protection and Indemnity (P&I) insurance, and other foreign insurance firms. This is unacceptable. The campaign may require that the Ministry of Marine and Blue Economy engage its Foreign Affairs counterpart.
By NIMASA’s 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.
To the best of our knowledge, the above coordinates do not reflect the facts about the situation in Nigeria.
The approaches and water channels to Nigeria are safe, so also are our ports. Therefore, continuous payment of War Risk Insurance premium is fraud against Nigeria.
