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Despite Nigeria’s removal from piracy-prone and high-risk maritime zones, shipowners are still paying heavy war risk insurance premiums on Nigeria-bound cargoes. Stakeholders say the charges, which have cost the country over $1.5bn in three years, no longer reflect reality and amount to unfair economic exploitation.
Nigeria’s maritime sector has recorded significant security improvements in recent years. The Deep Blue Project, led by the Nigerian Maritime Administration and Safety Agency (NIMASA) in partnership with the Nigerian Navy and other security agencies, has virtually ended piracy in the Gulf of Guinea. This earned Nigeria international recognition, including its delisting from the list of piracy-prone nations by the International Maritime Bureau in 2021 and from high-risk maritime zones by the International Bargaining Forum in 2023.
However, shipping companies and foreign insurers continue to impose war risk insurance premiums on vessels and cargoes coming into Nigeria. War risk insurance has two parts: liability for people and cargo, and hull insurance for vessels. These charges were introduced years ago when militancy and piracy plagued Nigerian waters.
Reports show that over the past three years, shipowners moving cargoes to Nigeria have paid more than $1.5bn in war risk premiums to Lloyd’s of London, Protection & Indemnity insurers, and other foreign underwriters. For a Very Large Crude Carrier valued at about $130m, the premium costs about $445,000 per voyage, while a container vessel worth $150m attracts a surcharge of around $525,000 per voyage. In addition, shipping lines impose cargo-specific charges such as Maersk’s transit disruption fee of up to $450 per container.
At a maritime event in Lagos, stakeholders questioned why Nigeria continues to pay such high charges despite its improved security. Former Director-General of NIMASA, Barrister Temisan Omatseye, described the practice as economic exploitation. He said the Joint War Risk Committee (JWRC) in London arbitrarily raised Nigeria’s premium rate from 0.025 per cent to 0.625 per cent, which was even higher than the 0.25 per cent imposed on Pakistan during its worst terrorism crisis.
“This is nothing but exploitation. Every time an incident is reported in Nigeria, the JWRC arbitrarily increases the premiums without scientific analysis or fair assessment,” Omatseye said.
He revealed that efforts were once made to establish a local insurance portal under NIMASA to challenge the dominance of foreign insurers, but the plan collapsed due to lack of political support and pressure from powerful reinsurers in the UK. According to him, the British government benefits financially from the premiums and would resist alternatives.
Omatseye further warned that Nigeria’s growing energy profile makes the country more vulnerable to exploitation. With the Dangote Refinery’s 650,000 barrels-per-day capacity, other modular refineries, and increased LNG exports, maritime traffic into Nigeria will rise, exposing shipowners to even higher premium costs. He also cautioned that foreign dominance in maritime insurance could weaken Nigeria’s sovereignty in global trade.
“The next colonisation of Nigeria will come through shipping. If sanctions are placed on us tomorrow, we will be crippled because we have no control over our cargoes. That is the danger ahead,” he said.
Similarly, the President of the Maritime Security Providers Association of Nigeria, Mr. Emmanuel Maiguwa, noted that piracy incidents dropped from more than 50 in 2020 to less than 10 in 2023, yet insurers have refused to revise premiums downward. He questioned why Nigeria continues to be punished despite its success in curbing piracy.
The Nigerian Navy confirmed that it arrested over 80 piracy suspects between 2019 and 2020, while joint operations with the Department of State Services helped to weaken criminal networks. The Navy, however, admitted that funding constraints remain a challenge.
Industry experts say Nigeria could save hundreds of millions of dollars annually if war risk premiums were removed. They called on the government to set up a Nigerian-backed war risk insurance pool to reduce costs and end foreign dominance.
“We should not be going to London to beg. Let us create our own mechanism here. Once we crash the rates, they will have no choice but to review theirs. Competition is the only way out,” Omatseye insisted.
Stakeholders agreed that unless Nigeria fixes its justice system, improves inter-agency collaboration, and addresses maritime cost structures, the burden of war risk premiums will persist despite improved security.
