The New Experience Newspapers Online News Indepth, Analysis and More
Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Bashir Jamoh, has expressed concern over the persisting War Risk Insurance on Nigerian bound cargoes and urged the relevant government agencies to remove it.
This followed the falling piracy incidence on the Nigerian waters and the Gulf of Guinea since February when the Nigeria Maritime Administration and Safety Agency (NIMASA) deployed the Integrated National Security and Waterways Protection Infrastructure popularly known as the Deep Blue Project.
In a statement issued by Head, Corporate Communications of NIMASA, Philip Kyanet, the agency revealed that this came as it has been disclosed that Nigeria’s maritime trade is being threatened due to the increasing war risk insurance premium now being paid by Nigeria-bound vessels.
Although according to Dr Jamoh piracy in the Nigerian waters was waning, stakeholders in the industry were worried that offshore underwriting firms still insist on high premium paid by those conveying cargoes to Nigeria.
War risk insurance is a type of insurance, which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. It is most commonly used in the shipping and aviation industries.
It generally has two components: War Risk Liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and War Risk Hull, which covers the craft itself and is calculated based on the value of the craft.
The premium varies based on the expected stability of the countries to which the vessel will travel, the war risk phenomenon, which was only known to countries with a high rate of piracy such as Somalia, also found its way into Nigeria following the massive involvement of youths in the Niger Delta in militant activities.
Speaking during the recent official flag-off of the deep blue project in Lagos by President Muhammadu Buhari, Bashir said: “Since the deployment of the deep blue project assets in February, there had been a steady decline in piracy attacks in the Nigerian waters every month.”
“We, therefore, invite the international shipping community to rethink the issue of war risk insurance on cargo bound for our ports. Nigeria has demonstrated enough commitment towards tackling maritime insecurity to avert such premium burden,” Jamoh said.
According to nonprofit Oceans Beyond Piracy’s 2020 reports, the total cost of additional war risk area premiums incurred by Nigeria bound ships transiting the Gulf of Guinea was $55.5 million in 2020 alone, and 35 per cent of ships transiting the area also carried additional kidnap and ransom insurance totalling $100.7 million.
Insecurity got so bad in the region before the deployment of the deep blue project that global insurance firm Beazley now offers “Gulf of Guinea Piracy Plus,” a bespoke insurance plan for maritime crew travelling through the area.
The plan provides compensation for illegal vessel seizures and crew kidnappings even in the absence of ransom demands. It tracks insured vessels on a 24-hour basis, but it limits claims to $25 million because the risks are so high.
The effect of this additional spending by shippers is the transfer of the burden on final consumers in form of higher cost for imported goods
While the deep blue project enters the implementation stage, NIMASA will not be complacent. It will continually evolve strategies including wide consultation with stakeholders and application of cutting-edge technology in the fight against maritime insecurity.
