Despite sweeping gains in maritime security, including Nigeria’s removal from piracy-prone and high-risk zones, shipowners still pay crippling war risk insurance premiums on Nigeria-bound cargoes. Stakeholders say the charges, amounting to over $1.5bn in three years, no longer reflect reality, describing them as unfair economic exploitation, ANOZIE EGOLE reports
Nigeria’s maritime sector has witnessed transformative improvements in security over the past few years. The Deep Blue Project, led by the Nigerian Maritime Administration and Safety Agency in partnership with the Nigerian Navy and other agencies, has virtually eliminated piracy in the Gulf of Guinea, earning praise from the International Maritime Organisation and culminating in Nigeria’s delisting from high-risk maritime zones. Despite these strides, Nigeria continues to shoulder a crippling financial burden in the form of war risk insurance surcharges, which some stakeholders say no longer reflect reality.
War risk insurance comprises two parts: war risk liability, covering people and cargo, and war risk hull, insuring the vessel itself. When Nigeria was deemed high-risk due to militancy and piracy, international shipping firms began levying hefty WRI premiums on Nigeria-bound vessels.
Reports suggest that over the last three years, Nigeria has paid more than $1.5bn in WRI premiums to Lloyd’s of London, Protection & Indemnity insurers, and other foreign underwriters. For a Very Large Crude Carrier valued at about $130m, WRI charges stand at roughly $445,000 per voyage. For a container vessel worth around $150m, the surcharge is about $525,000 per voyage. Additional cargo-specific levies also apply: Maersk, for instance, imposes a transit disruption surcharge of up to $450 per container, while other shipping lines add $40–$50 per 20-foot container in war risk charges. This financial burden is especially onerous at a time when Nigeria’s security landscape has dramatically improved.
Nigeria has not recorded a single piracy incident in over three years, with the International Maritime Bureau officially removing the country from its list of piracy-prone nations in 2021. Furthermore, the International Bargaining Forum delisted Nigeria from high-risk maritime zones in 2023. Despite this renewed status, shipping companies continue to impose WRI premiums, ignoring the fact that the risks they are meant to address no longer exist.
Stakeholders speak
A maritime research group under the auspices of the Sea Empowerment and Research Centre admitted that shipowners in Nigeria still incur significant costs for security measures despite the reduction in piracy.
SEREC, in a recent statement by its Head of Research, Mr. Eugene Nweke, sent to The PUNCH, explained that “there isn’t specific information on daily costs ranging from $5,000 to $8,000 for hiring security vessels, as touted, but the shipowners are in a better position to unravel and report on this based on daily operational experiences.”
According to Nweke, what is known to SEREC is that security escort vessels are still operational: “Another notable concern is the maritime security costs. You recall that, before the Deep Blue Project, ships coming to Lagos ports paid around $2,500 at the Lagos secure anchorage zone.
At a recent event in Lagos, maritime stakeholders lamented the continuous payment of WRI premium on Nigerian-bound cargoes even where there are no wars.
A former Director-General of NIMASA, Barrister Temisan Omatseye, described the payment as unfair exploitation of Nigeria by foreign insurers through arbitrary WRI premiums, insisting that the country has been compelled to pay more than even Pakistan at the height of its terror crisis.
Omatseye disclosed that the Joint War Risk Committee in London arbitrarily raised Nigeria’s war risk premium from 0.025 per cent to 0.625 per cent, showing a sharp increase that exceeded the 0.25 per cent imposed on Pakistan during its worst period of insurgency.
“This is nothing but economic exploitation. Every time an incident is reported in Nigeria, the JWRC arbitrarily decides to raise the premiums. There is no scientific analysis, no fair assessment; it is simply at their discretion,” he declared.
He revealed that during his tenure, efforts were made to set up a local insurance portal under NIMASA to challenge the dominance of foreign players, but the initiative collapsed due to a lack of political backing and resistance from powerful reinsurers in the UK.
“Even when we secured a UK reinsurer to support us, he said he could only proceed if there was a green light from Nigeria’s president. The fear was that the British government earns so much from these premiums that they would block any alternative,” he said.
The former NIMASA boss warned that Nigeria’s growing role as a global energy hub makes the country an even bigger target for exploitation.
According to him, with the Dangote Refinery’s 650,000 barrels-per-day capacity, other modular refineries coming on stream, and increased LNG exports, the maritime traffic into Nigeria will multiply, leaving shipowners vulnerable to excessive premiums unless local solutions are developed.
Omatseye also cautioned that if left unchecked, the dominance of foreign insurers and external security frameworks could cripple 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 warned.
The President of the Maritime Security Providers Association of Nigeria, Mr. Emmanuel Maiguwa, highlighted that while piracy incidents have dropped significantly from more than 50 in 2020 to less than 10 in 2023, insurers have not revised Nigeria’s premiums downward.
He queried why Nigeria is still being punished despite progress in reducing pirate attacks.
The Nigerian Navy had revealed that it arrested over 80 piracy suspects between 2019 and 2020 through intelligence-driven operations, some linked to Somali-owned vessels operating in Nigerian waters.
The Navy admitted that while sustained sea presence and joint operations with the Department of State Services had weakened piracy networks, funding constraints were major barriers.
Conclusion
Nigeria finds itself in a paradox: while its waters are safer than ever, its maritime sector remains financially hamstrung by war risk insurance premiums that no longer reflect grounded threat levels. With over $1.5bn squandered in just three years, and potential savings in the hundreds of billions of dollars annually on the table, the imperative is clear. Through sustained governance, diplomacy, and strategic reform, Nigeria can eliminate this outdated financial penalty and finally reap the full benefits of its maritime security achievements.
Omatseye emphasised the need for the government to urgently support the creation of a Nigerian-backed war risk insurance pool to drive down costs and end foreign dominance.
“We should not be going to London to beg anyone. Let us create our own war risk insurance mechanism here. Once we crash the rates, they will have no choice but to review theirs. Competition is the only way out,” Omatseye argued.
“We don’t need to reinvent the wheel. The Marine Police have jurisdiction in inland waters, the Navy in coastal defence, and NIMASA has the resources. What we need is collaboration, not competition. Even in the U.S., the Navy lowers its flag when performing Coast Guard duties. Nigeria can do the same,” Omatseye added.
Maiguwa concluded that unless Nigeria fixes its justice system, inter-agency collaboration, and maritime cost structures, the war risk premium burden will persist, regardless of improvements in actual security.
