In what many consider a baseless practice, foreign insurance firms continue to impose hefty war risk insurance (WRI) premiums on cargo bound for Nigeria—costing the country an estimated $500 million annually, even by conservative estimates.
These added insurance costs are ultimately passed on to consumers, driving up the prices of goods and services across the country. Industry stakeholders and observers are increasingly questioning why such surcharges persist, especially given Nigeria’s improved maritime security and the absence of recent attacks along its waters and throughout the Gulf of Guinea.
In the past three years alone, Nigeria has paid a staggering $1.5 billion in WRI premiums to Lloyd’s of London, Protection and Indemnity (P&I) clubs, and other international insurers. Local shipowners and importers have repeatedly condemned the charges as unjustified and exploitative.
War risk insurance is a surcharge levied by global shipping firms on vessels heading to countries deemed high-risk. It typically includes:
- War Risk Liability: Covering crew and cargo aboard the vessel, based on the indemnity amount.
- War Risk Hull: Covering the vessel itself, calculated based on its value.
These charges were originally introduced during a period of heightened insecurity in the Niger Delta and high rates of piracy. However, industry experts argue that the security conditions that once justified these premiums no longer apply.
The financial impact is significant. A single voyage by a Very Large Crude Carrier (VLCC) worth $130 million attracts about $445,000 in WRI premiums. For newer container vessels valued at $150 million, the charge jumps to $525,000 per trip. On top of this, shipping giant Maersk now applies a transit disruption surcharge of up to $450 per container, while other lines charge $40 to $50 per 20-foot container in war risk fees.
These escalating costs have drawn the attention of the Nigerian Maritime Administration and Safety Agency (NIMASA), which has launched an aggressive campaign to eliminate war risk insurance on cargo headed for Nigerian ports. Under the leadership of Dr. Dayo Mobereola, NIMASA is prioritizing this issue as part of its broader maritime reforms.
The NIMASA Act and the Merchant Shipping Act empower the agency to promote shipping development in Nigeria. Officials argue that removing the unjustified WRI premium is now essential for economic progress and maritime competitiveness.
Notably, Nigeria has recorded zero piracy incidents in over three years. In 2021, the International Maritime Bureau (IMB) officially removed Nigeria from its list of piracy-prone nations—a milestone achieved through joint efforts by NIMASA and the Nigerian Navy in securing the Gulf of Guinea. These efforts have earned international commendation, including from the International Maritime Organisation (IMO).
Yet, despite these clear security improvements, foreign shipping companies have not lifted the war risk surcharges—leaving stakeholders and the public asking: Why are Nigerians still paying for a threat that no longer exists
