Challenges of Nigeria’s marine insurance mirror global situation
The Nigerian maritime insurance market, like the global market is fraught with challenges. While the local market is battling the prevalence of fake operators and fake certificates, causing the industry to lose huge premiums, and also erosion of confidence, the global market is facing huge losses as result of catastrophe events and terrorist attacks.
The marine insurance business, usually reported together with aviation risks, according to the Nigerian insurance industry report, contributed just N22 .09 billion in 2017 out of the industry’ ‘s nearly N300 billion premium.
The Nigerian Insurers Assurance however has secured the approval of the National Insurance Commission (NAICOM) and the Central Bank of Nigeria (CBN) to digitalise marine insurance business.
Besides, it is already working with some partners including the NIBBS to drive marine insurance through the USSD code, just as it has done with motor insurance policies.
Tope Smart, chairman of NIA disclosed this to journalists in Lagos, adding that the effort would check and eradicate fake insurance in marine business, as well as restore consumer confidence.
Sean Dalton, the International Union of Marine Insurance (IUMI) Cargo Committee Chair, reported late last year that despite global cargo premiums amounting to $16.1 billion, the cargo line has been unprofitable for several years with rising loss ratios and expense ratios and this is of great concern to underwriters.
Speaking at IUMI’s annual conference in Cape Town, Dalton explained that growth in global merchandise trade was expected to remain strong in 2018 and 2019. Whilst this was positive for cargo marine insurers, continued growth was dependent on various factors, political and economic, and there were some serious concerns. An increasing number of countries were restricting or restraining international trade and this was creating a protectionist operating environment.
2017 was the worst year for natural catastrophe losses in the history of the insurance industry. Hurricanes Harvey, Irma and Maria all caused cargo losses, particularly with an increase in static risk cover. Sean Dalton explains:
“The cargo insurance market is starting to firm but it still has a way to go. Many cargo accounts were severely affected by events in 2017; and 2018 looks set to be another very active year.
“Nat-cats and large/outlier losses, such as the Tianjin port explosion in 2016, have demonstrated the need for the cargo market to price realistically for such losses and develop risk adequate premiums.”