Despite Zero Piracy in Three Years, Nigeria Still Pays $1.5 Billion in War Risk Premiums—SEREC
Nigeria has marked a significant milestone of three consecutive years without a single piracy incident on vessels sailing to its ports through the Gulf of Guinea. Yet, the country continues to bear the weight of over $1.5 billion in War Risk Insurance premiums, according to the Sea Empowerment and Research Centre (SEREC).
The group revealed in its latest bulletin that Nigeria pays an estimated $500 million annually in war risk surcharges imposed by international shipping insurers—costs that persist despite the improved security brought about by the Deep Blue Project, a federal initiative launched to combat piracy and maritime crime.
“This is a huge financial burden that no longer reflects our maritime reality,” said Eugene Nweke, Head of Research at SEREC.
“Nigeria has gone three years without a piracy attack, yet foreign insurers continue to classify our waters as high-risk. This outdated classification must end.”
Outdated Risk Classifications
SEREC highlighted that War Risk Insurance, originally designed for vessels traversing high-conflict zones, comprises two main components:
- War Risk Liability (covering cargo and crew), and
- War Risk Hull (covering the vessel itself).
These premiums, the group argued, remain in place long after the threat has been neutralised.
While some sources have estimated that eliminating these premiums could save Nigeria up to $400 billion annually, SEREC clarified that this figure appears to represent a theoretical estimate of wider economic benefits, rather than a direct calculation based on the actual $1.5 billion lost over three years.
“The link between the $500 million annual premium and the $400 billion savings projection is not directly proportional,” Nweke explained.
“More specific data from agencies like NIMASA is required to provide accurate financial assessments.”
High Costs, Missed Opportunities
Beyond the premiums, SEREC also raised concerns over the opportunity costs associated with maintaining such high levels of maritime security.
“While the Deep Blue Project has been hugely successful, imagine the national impact if even part of those funds had been channeled into port modernization, transport logistics, or the fisheries sector—areas critical to trade and food security,” the bulletin stated.
Call for Diplomatic Pressure and Insurance Reform
The organization urged the Nigerian government to intensify diplomatic engagement with international insurance underwriters and push for a comprehensive reassessment of the country’s maritime risk profile, which they say is now grossly outdated.
SEREC also acknowledged ongoing efforts by regulatory bodies such as the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Shippers’ Council (NSC), both of which have launched initiatives to eliminate the war risk surcharge. These agencies argue that continuing to classify Nigerian waters as high-risk inflates shipping costs, thereby driving up the price of goods.
“Insurers must align their premiums with the present realities in Nigerian waters,” SEREC said.
“Security has drastically improved, yet Nigeria continues to be economically penalized for a threat that no longer exists.”
The group also commended the Minister of Marine and Blue Economy for providing strategic leadership in sustaining the Deep Blue Project, which has helped earn Nigeria international recognition for its maritime security reforms.
Unlocking Economic Potential
In conclusion, SEREC asserted that while the costs of maintaining maritime security are significant, the benefits—zero piracy, increased investor confidence, enhanced trade, and maritime stability—far outweigh the expenditure. However, the group insisted that addressing the lingering financial burden of war risk premiums is essential to unlocking the full economic potential of Nigeria’s maritime reforms.
