Marine business suffers billion naira losses for non-appreciation of insurance

Nigeria’s marine businesses have continued to suffer billions of naira losses on cargo damage and associated risks without compensation, as a result of high level of ignorance and poor appreciation of the benefits of insurance.

Experts say the non availability of loss data in the country’s marine business is worsening the level of ignorance and growing lack of interest.

According to experts, importers and exporters who were supposed to take advantage of insurance to protect their business take for granted the impact of loss and suffer in the long run.

The consciousness is low, and so importers and exporters continuously run fowl of the law, pay fines to Customs, which are bigger than insurance premium and when loss occur their business is grounded, experts said.

According to the analysts, another outcome of this ignorance is existence of all sorts of operators claiming to provide insurance, and so issue fake marine certificates to these international traders at any price they accept to pay, stating that 60 percent of the marine business in the industry is lost to fake operators.

At the end, the insurance industry losses billion of naira premium and the insured are neither compensated nor indemnified when a loss happens because the fake insurer will not be found anywhere.

Tola Adegbayi, executive director, General Business, Leadway Assurance Company Limited regretted that most importers where yet to realize that all goods coming into the country should have insurance according to the law.

She said many of them bring in goods into the country without insurance and go to pay fines to (Customs) government for ignorantly flouting the law.

“The funniest thing is that insurance premium is cheaper than the fine you pay for not taking the protection, and this fine now comes without a cover for damage or loss”.

Adegbayi observed that the challenge has been lack of loss data in the industry. “For lack of data, many assume that no loss is taking place, but that is not true. People are losing their goods and some have gone out of business for the sake of not taking insurance cover for their imports or exports”.

She noted that a lot of these gaps will be taken care of when the Nigerian insurance industry data base module two for maritime business becomes operational.

“What this is going to do is that it will address the challenge of fake insurance certificates; increase awareness of the benefits of marine insurance as well as role of insurance in business growth for maritime industry, she stated.

Eddie Efekoha, chairman, Nigerian Insurers Association (NIA) said the marine module has been running and member companies are daily uploading on the platform.

According to him, at the end of May 2017, thirty three member companies of the NIA have uploaded 65,000 marine policies, stating that after text running the scheme it will be launched with the support of many stakeholders.

Members are encouraged to continue to upload their marine policies, whilst plans are being made to bring other stakeholders into the scheme.

To tackle the challenge of fake insurance, the National Insurance Commission (NAICOM) had announced its collaboration with the Nigerian Customs Service (NCS) to ensure that all goods imported into Nigeria have genuine insurance.

The Comptroller-General of Customs, Hameed Ibrahim Ali (rtd), had said at the meeting with NAICOM that it would collaborate with the Commission in building technical capacity for the customs to be able to detect fake insurance at the seaports and others. “The commission has graciously agreed to give us his team of experts who will train us on insurance. This is novel and we are sincerely grateful, Ibrahim Ali said

Of the total gross premium income of N217.75 billion generated by the Nigerian insurance industry in the 2011, marine and aviation risks contributed N23.40 billion gross premium.

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Modestus Anaesoronye

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