Nigeria’s push for removal from War Risk Insurance

Lanre Abdul

Nigeria has ramped up a crusade to the global maritime community to remove the country as one of the high risk countries for international shipping and maritime activities where the war risk insurance premium was imposed.

War risk insurance (WRI) is an additional surcharge imposed by international shipping companies on cargo bound for Nigeria. It comprises two key components: war risk liability, which covers people and goods aboard the vessel and is calculated based on the indemnity amount, and war risk hull, which covers the vessel itself and is determined by its value.

According to Wikipedia, War risk insurance is a type of insurance which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking.

The premium which is considered as an additional financial burden was introduced at the peak of Niger Delta insurgency and piracy in Nigeria’s maritime sector.

With the WRI, the global maritime community believes Nigeria is at war and so the insurance premium is placed on cargo coming to Nigeria to cover damage or possible hijacking of ships.

Since its introduction, it is estimated that Nigeria has incurred billions of dollars in losses paid as war risk insurance premium.

According to the estimate from the Nigeria Maritime Administration and Safety Agency (NIMASA), available figures indicate that 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.

According to the agency, the impact on Nigeria’s economy is staggering for a Very Large Crude Carrier (VLCC) valued at $130 million, saying the WRI surcharge per voyage is approximately $445,000.

For new container vessels valued at $150 million, the cost rises to $525,000 per voyage. Maersk, one of the world’s largest shipping companies, has also introduced a transit disruption surcharge of up to $450 per container, while other shipping lines impose a war risk surcharge of $40–$50 per 20-foot container.

Since the era of the immediate past Director-General of NIMASA, Dr. Bashir Jamoh, Nigeria has championed the crusade to delist the country and end the war risk insurance premiums.

The country has hinged the crusade on not only the peace in the Niger Delta but the stability on the waterways with piracy almost eliminated.

It is noteworthy that Nigeria has not recorded any case of piracy in the last three years and even as the International Maritime Bureau (IMB) is reporting that Nigeria recorded the least cases of armed robberies across its coastal waters and pirate attacks globally in the first half of 2022.

The report says none of the 58 incidents reported globally in the first six months of 2022 occurred in Nigeria.

The record is the least Nigeria has had since 2018 when 31 cases were reported in the country in the first six months of the year.

The report said that the first half of 2022 witnessed the least cases of piracy and vessel hijack globally since 2018 with only 58 reported cases compared to 68 cases within the same period in 2021.

According to the IMB report titled, ‘Piracy and Armed Robbery against Ship’, of the 58 incidents, 12 incidents of piracy were reported in the Gulf of Guinea, and 10 cases were classified as armed robbery and the remaining two were referred to as “Piracy Attacks” – with none of them occurring in Nigerian waters.

The government of Nigeria over the years has invested heavily in securing the waterways against robbery and pirate attacks which observers believe is responsible for the present zero piracy.

In 2021, former President Muhammadu launched the Deep Blue Sea Project which was an Integrated National Security and Waterways Protection Infrastructure framework.

This project, which was conceived by the Ministry of Transportation under the leadership of Rotimi Amaechi as the minister was handled by Homeland Security International (HLSI), an Israeli firm, for the purpose of tackling piracy, sea robbery, kidnapping, oil theft, smuggling, illegal trafficking of drugs and other related maritime crimes on Nigeria’s territorial waters and its Exclusive Economic Zone (EEZ) up to the Gulf of Guinea region.

The project also involved all layers of defence in the country, jointly patrolling the waterways, covering the entire Gulf of Guinea. This, analysts believe, has helped in securing the waterways and achieving the zero piracy level Nigeria has attained in the recent years warranting the call for the country’s declassification as a high risk country for maritime activities.

Osagie Edward, Head of Public Relations at NIMASA in a statement to itemise series of charges imposed on Nigeria said war risk insurance (WRI) is an additional surcharge imposed by international shipping companies on Nigeria-bound cargo.

“Recognising the severe economic implications of this financial burden, NIMASA under the leadership of Dr Dayo Mobereola has launched an aggressive campaign to eliminate war risk insurance on Nigeria-bound cargo.

“The NIMASA Act and the Merchant Shipping Act mandate the agency to promote shipping development, and removing the WRI premium has become a central focus of its maritime reforms.

“The security concerns that originally justified these premiums no longer exist. Nigeria has not recorded a single piracy incident in over three years, and in 2021, the International Maritime Bureau (IMB) officially removed Nigeria from its list of piracy-prone countries,” he stated.

Recounting efforts made by NIMASA and the Nigerian Navy, through the Ministry of Marine and Blue Economy and the Ministry of Defense, Osagie stated that Nigeria has made significant investments in maritime security through initiatives like the Deep Blue Project, which, according him, has successfully eliminated piracy in the country’s waters for over 30 consecutive months—a record unmatched anywhere in the world.

“In addition, Nigeria collaborates closely with the IMO and other international bodies to combat maritime threats, further reducing its risk classification. IMO Secretary-General Arsenio Dominguez has publicly commended Nigeria’s efforts in securing the Gulf of Guinea.

“Despite these improvements, shipowners and insurers have refused to acknowledge Nigeria’s new security status, continuing to levy exorbitant premiums on vessels operating in the country” he added.

He revealed that the international diplomacy played by Dr. Mobereola, had earned the nation global recognition

“Determined to break this cycle of financial exploitation, Dr. Mobereola under the directives of the Minister of Marine and Blue Economy, AdegboyegaOyetola took Nigeria’s case to international stakeholders, urging them to support the removal of war risk insurance premiums.

“In a major diplomatic move, he engaged Chatham House, where he met with Dr. Alex Vines, Director of the Africa Programme, who agreed to escalate the matter to the United Nations. NIMASA has also engaged major global shipping organizations, including: • BIMCO (Baltic and International Maritime Council), the world’s largest shipping association. • The International Chamber of Shipping (ICS). • INTERCARGO (International Association of Dry Cargo Shipowners). • INTERTANKO (International Association of Independent Tanker Owners).

“In discussions with these organizations, Dr. Mobereola emphasized that Nigeria has invested billions in maritime security, yet continues to be unfairly penalized. He urged the global shipping community to recognize the country’s improved security status and remove the unjustified WRI premiums. StinneTaigerIvø, Deputy Secretary General of BIMCO, acknowledged Nigeria’s progress and stated that shipowners should take the lead in pushing for lower premiums.

“Similarly, Zhou Xianyong of INTERCARGO assured NIMASA of their support in Nigeria’s campaign to be delisted from war risk insurance premium zones. Reducing these premiums is critical for Nigeria’s competitiveness in global trade. Lower shipping costs will Encourage more international trade, Attract foreign investment, and Strengthen Nigeria’s position as a leading blue economy player.

“Recently, NIMASA met with a Danish delegation led by Kristin Skov-Spilling, Chief Technical Advisor from the Danish Ministry of Foreign Affairs, urging Denmark to advocate for a reduction in war risk insurance premiums. Some critics argue that Denmark cannot intervene in private insurance matters, but this argument is flawed.

“Denmark has a significant interest in the Maersk Line, which contributes over 15% of the country’s GDP. If Denmark exerts pressure on Maersk, other shipping companies will likely follow suit. Dr. Dayo Mobereola and his Management team at NIMASA have successfully brought global attention to Nigeria’s unfair war risk insurance burden.

“Now, it is time for all stakeholders—government, industry, and international bodies—to support the removal of this unjustified premium. Nigeria has fulfilled its obligations, securing its waters and eliminating piracy. Yet, foreign insurance firms continue to profit while Nigerian businesses and consumers bear the costs. The message is clear: Nigeria cannot continue paying war risk insurance premiums indefinitely. The time for change is now and lets sustain the momentum,” he said.

Minister of Marine and Blue Economy, Alhaji AdegboyegaOyetola who recently spoke on the strides in his Ministry emphasised that “Nigeria remains committed to safeguarding the crucial shipping lanes that traverse West Africa and the Gulf of Guinea.”

He said, “The implementation of the Deep Blue Sea Project and the Falcon Eye Surveillance Systems, featuring advanced surveillance and response systems, has significantly strengthened maritime security. These efforts have sustained our zero-piracy record in the region in the last three years. By deploying cutting-edge maritime security assets, Nigeria has cemented its role as a critical guardian of maritime security.”