August 10, 2022

Reporters’ Diary

Factual Reportage

Jamoh Calls For Removal of Insurance Premium On Bound Cargoes

By Joy Enamuna

Bearly few weeks after the Federal Government of Nigeria invested Trillions of Naira to secure the country’s Water Ways, the Director General of Nigeria Maritime Administration and Safety Agency (NIMASA) Dr. Bashir Jamoh has called for the total removal of Insurance on Nigeria bound cargoes.

The DG who expressed concerned and fears over the huge amount been paid by Nigerian Shippers, said the effect of all this additional spending are been transferred to final consumers.
He equally sees it as a colossal waste of funds.

In a press release made available to the Reporters’ Diary, the DG said:” It has been discovered that Nigeria’s maritime trade is to say the least threatened due to the increasing war risk insurance premium now being paid by Nigeria-bound vessels. Piracy in the Nigerian waters is waning, stakeholders in the industry are worried that offshore underwriting firms still insist on very high premium to be paid by those conveying cargoes to Nigeria”.

He said that
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.”

Jamoh stressed that the 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.
But 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 high rate of piracy such as Somalia, also found its way into Nigeria following massive involvement of youths in the Niger Delta in militant activities.

“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 totaling $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 traveling 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 because the risks are so high, it limits claims to $25 million.

While the deep blue project enters implementation stage, NIMASA will not be complacent as it will continually evolve strategies including wide consultation with stakeholders and application of cutting edge technology.