Despite a sharp decline in piracy incidents in the Gulf of Guinea, importers have paid $1.5 billion in War Risk Insurance (WRI) premiums on Nigeria-bound cargoes over the past three years, according to data released by the Nigerian Maritime Administration and Safety Agency (NIMASA).
The surcharge, imposed by international shipping companies, is meant to cover the risks associated with operating in high-risk zones. However, industry stakeholders and maritime authorities are questioning the continued imposition of these charges, arguing that Nigeria’s waters are no longer unsafe.
The Cost of War Risk Insurance
According to Osagie Edward, Head of Public Relations at NIMASA, the WRI surcharge significantly increases shipping costs for vessels entering Nigerian waters.
“For a Very Large Crude Carrier (VLCC) valued at $130 million, the WRI surcharge per voyage is approximately $445,000, while for new container vessels valued at $150 million, the cost rises to $525,000 per voyage,” Edward stated.
The financial burden extends to smaller shipments as well. Major shipping companies such as Maersk Line impose a Transit Disruption Surcharge of $450 per container, while other firms charge between $40 and $50 for every 20-foot container bound for Nigeria.
Data from NIMASA indicates that 4,610 flagged vessels and 1,102 cabotage vessels operating in Nigeria are potentially affected by these surcharges.
Outdated Justification for Premiums
The WRI premium was introduced during the Niger Delta militancy and a period of frequent piracy attacks. However, NIMASA insists that these security threats no longer exist.
“The country has not recorded a single piracy incident in over three years,” Edward said. “In 2021, the International Maritime Bureau removed Nigeria from its list of piracy-prone nations, and in 2023, the International Bargaining Forum delisted the country from high-risk maritime zones.”
Despite these developments, foreign insurers continue to classify Nigeria as a war-risk area—an assessment that NIMASA argues is outdated and unjustified.
Economic Impact on Nigeria
Stakeholders argue that the continued imposition of war risk premiums increases freight costs, placing Nigerian importers and the economy at a disadvantage.
Capt. Tajudeen Alao, President of the National Association of Master Mariners, described the financial burden as unfair.
“The freight rate for cargoes coming to Nigeria is significantly higher due to the war risk surcharge,” Alao said. “For instance, importers were previously paying about £6,200 as freight for a 20-foot container on vessels coming from the United Kingdom to Nigeria.”
Similarly, Capt. Emmanuel Iheanacho, a shipowner, criticized the classification of Nigeria as a war zone, calling the surcharge exploitative.
“These extra charges are unnecessary and strip value from the Nigerian economy,” Iheanacho stated. “Nigeria is not a war-torn country, and this premium is nothing more than a means to exploit international trade.”
NIMASA’s Push to Eliminate War Risk Premiums
In response, NIMASA has intensified efforts to end the war risk surcharge through international advocacy. The agency has engaged with key players in the global maritime industry, including the Baltic and International Maritime Council (BIMCO) and the International Chamber of Shipping.
Dr. Dayo Mobereola, Director-General of NIMASA, has also raised the issue with Chatham House, where it is now being escalated to the United Nations.
“Nigeria has invested billions of naira in maritime security through projects like the Deep Blue Project, which has eliminated piracy in the country’s waters for over 30 consecutive months—a record unmatched globally,” Edward said.
The agency is also lobbying governments such as Denmark, home to Maersk Line, which contributes over 15% of Nigeria’s GDP, to advocate for the removal of WRI premiums.
Stinne Taiger Ivø, Deputy Secretary General of BIMCO, acknowledged Nigeria’s improved security status, saying, “Shipowners should take the lead in pushing for lower premiums.”
Similarly, Zhou Xianyong of INTERCARGO assured NIMASA of their support in the campaign to delist Nigeria from war-risk zones.
The Path Forward
NIMASA is calling on the global shipping community to recognize Nigeria’s improved security and remove what it describes as unjustified premiums.
“Reducing these premiums is critical for Nigeria’s competitiveness in global trade,” Edward emphasized. “Lower shipping costs will attract foreign investment, encourage international trade, and strengthen Nigeria’s position as a leading maritime economy.”
As pressure mounts on international insurers, NIMASA and the Federal Government remain committed to ensuring that Nigeria is no longer penalized for threats that no longer exist.