NIMASA’s Initiative to Abolish War Risk Insurance Premiums in Nigeria

The Nigerian Maritime Administration and Safety Agency (NIMASA) is working to eliminate war risk insurance premiums imposed on shipments to Nigeria, which have resulted in over $1.5 billion in payments in the past three years. The push for removing these premiums is driven by Nigeria’s improved maritime security and successful initiatives against piracy. NIMASA is leading diplomatic efforts to engage international stakeholders to acknowledge these advancements and advocate for reduced shipping costs, thereby fostering Nigeria’s competitiveness in global trade.

War risk insurance (WRI) represents an additional financial burden on cargo transported to Nigeria, primarily imposed by international shipping companies. This insurance consists of war risk liability, which protects individuals and goods on board, and war risk hull, safeguarding the vessel itself. Initially implemented due to threats during the Niger Delta militancy and piracy incidents, these premiums have become a substantial economic weight, with Nigeria expending over $1.5 billion on WRI over the past three years alone. For example, a Very Large Crude Carrier incurs approximately $445,000 per voyage due to this surcharge, significantly increasing shipping costs.

In response to the economic challenges posed by WRI premiums, the Nigerian Maritime Administration and Safety Agency (NIMASA), led by Dr. Dayo Mobereola, has initiated an assertive campaign aimed at abolishing these surcharges on shipments to Nigeria. This campaign aligns with NIMASA’s statutory mandate to foster maritime development. Given that piracy incidents have not been recorded in Nigeria for over three years, and with the country officially removed from piracy-prone lists, the justification for these insurance premiums is now questionable.

To further mitigate WRI premiums, Nigeria’s government has invested substantially in maritime security initiatives, notably the Deep Blue Project, which has effectively eradicated piracy for over 30 months. Collaborating with international entities, such as the International Maritime Organization (IMO), Nigeria is enhancing its maritime safety standards. Despite these strides, international insurers continue to impose high premiums despite acknowledging Nigeria’s improvements in security.

Dr. Mobereola has taken the initiative to communicate with various international stakeholders, including organizations such as BIMCO, the International Chamber of Shipping (ICS), and INTERCARGO, advocating for the dismissal of WRI premiums for Nigeria. Engagements at forums, including Chatham House, are part of a larger diplomatic effort to reposition Nigeria’s maritime image on the global stage. He has received support from figures within those organizations, emphasizing the need for the shipping industry to recognize Nigeria’s achievements in security.

Recently, discussions with a Danish delegation have reinforced Nigeria’s campaign against WRI. Although some argue that Denmark should not influence private insurance matters, the nation’s substantial connection to Maersk, a major shipping entity, prompts consideration of intervention. Dr. Dayo Mobereola and NIMASA’s management have succeeded in highlighting the issues related to WRI, and it is imperative for all pertinent stakeholders, including the government and international bodies, to advocate for the elimination of these unjust premiums that unfairly burden Nigerian businesses.

In summary, Nigeria faces a significant financial obstacle due to the imposition of war risk insurance premiums on its shipping industry. NIMASA, under the leadership of Dr. Dayo Mobereola, is actively campaigning to eliminate these costs, citing improved security conditions and substantial investments in maritime safety. International collaboration and recognition from global shipping stakeholders are critical in this effort. A unified approach from all stakeholders can potentially alleviate this unnecessary economic burden and enable Nigeria to enhance its standing in global maritime trade.

Original Source: www.thisdaylive.com