According to the Nigerian Maritime Administration and Safety Agency, Nigeria has paid more than $1.5 billion in war risk insurance premiums to international underwriters over the last three years.

On Friday, Osagie Edward, who leads public relations at NIMASA, stated that the effect of WRI premiums on the economy is astounding.

War risk coverage ensures protection for losses and damage caused by acts of war such as invasions, uprisings, rebellions, and seizures. This type of insurance is widely utilized in sectors like maritime transport and air travel to safeguard against aggressive actions and particular hazards prevalent in volatile regions.

The agency NIMASA stated that the WRI is an extra fee levied by global shipping firms on goods destined for Nigeria.

The statement indicated that it consists of two main parts: war risk liability, covering individuals and cargo onboard the ship, with calculations based on the compensation sum; and war risk hull coverage, protecting the vessel itself, set according to its worth.

The agency stated that the financial burden, which was first implemented at the peak of Niger Delta militancy and piracy issues, has outlived its intended purpose.

The statement indicated, “Despite the lack of exact figures from the Nigerian Bureau of Statistics regarding total WRI payments to international insurers, current statistics show that Nigeria has paid more than $1.5 billion within just the last three years to entities such as Lloyd’s of London, Protection and Indemnity (P&I) insurance providers, and various overseas insurance companies.”

The effect on Nigeria’s economy is immense: for a Very Large Crude Carrier (VLCC) worth $130 million, the WRI surcharge per trip is around $445,000. For newly built container ships priced at $150 million each, this charge increases to about $525,000 per journey.

Maersk, among the biggest global shipping firms, has implemented a transit disruption fee of as much as $450 for each container. Meanwhile, other carriers have established a war risk charge ranging from $40 to $50 for every 20-foot container.

Nonetheless, Edward mentioned that NIMASA has interacted with international entities such as Chatham House, the UN, BIMCO, and INTERCARGO, aiming to acknowledge Nigeria’s advancements and eliminate the additional charges.

However, the statement indicated that the agency has launched a campaign aimed at eliminating the payment of war risk insurance premiums for cargoes destined for Nigeria, suggesting that this initiative is anticipated to save “the nation more than $400 billion each year.”

Edward stated that Nigeria was deemed piracy-free in 2021; therefore, the payments should cease.

“Given the significant economic consequences posed by this financial strain, NIMASA—led by Dr. Dayo Mobereola—has initiated a robust effort to remove war risk insurance for cargo destined for Nigeria,” stated Edward.

The NIMASA Act along with the Merchant Shipping Act require the agency to foster growth in the shipping sector, and eliminating the WRI premium has emerged as a key component of their maritime restructuring initiatives.

The security concerns that initially warranted these surcharges no longer apply. Nigeria hasn’t seen a single act of piracy for more than three years, and in 2021, the International Maritime Bureau (IMB) took Nigeria off its list of high-piracy-risk nations.

During the last half-decade, NIMASA has worked alongside the Nigerian Navy to spearhead an unparalleled offensive against piracy within the Gulf of Guinea, garnering worldwide acclaim from the International Maritime Organization (IMO).

Even with these accomplishments, international shipping firms persist in levying war-risk insurance surcharges on goods destined for Nigeria.

In 2023, the International Bargaining Forum confirmed Nigeria’s advancements by removing the nation from the high-risk maritime countries list.

Why have international shipping groups kept imposing hefty surcharges despite piracy ceasing to be a worry?

He observed that Nigeria has achieved notable progress in maritime security through the Deep Blue Project initiated by the Ministry of Marine and Blue Economy, resulting in more than 30 continuous months without piracy incidents in Nigerian territorial waters.

“Furthermore, Nigeria works closely with the IMO and other international organizations to tackle maritime threats, which also decreases its risk rating,” Edward mentioned.

He mentioned that Arsenio Dominguez, the IMO secretary-general, has openly praised Nigeria’s efforts in safeguarding the Gulf of Guinea.

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