NIMASA moves to end War Risk Insurance liability in Gulf of Guinea

Taking in 17 countries from Senegal to Angola, the Gulf of Guinea (GoG) is richly endowed with vast reserves of hydrocarbon, solid minerals (diamond, tin and cobalt), and fisheries, making it a highly strategic area. While not a major international shipping route at present, the Gulf of Guinea represents 25 per cent of African maritime traffic and has nearly 20 commercial seaports.

According to the Centre for Strategic and International Studies, the Gulf of Guinea is home to 4.5 percent of the world’s proven oil reserves (with 60 per cent of Africa’s oil production) and 2.7 per cent of proven global natural gas reserves.

Two-thirds of these reserves are concentrated within the Exclusive Economic Zone (EEZ) of Nigeria, the centre of gravity in the region, whose oil sector accounts for 75 percent of the state’s revenue and 90 percent of total exports.

The recently launched Deep Blue Project offers an opportunity for improved ease of doing business conditions in Nigeria, and the greater Gulf of Guinea area. It is envisaged that this concerted effort to permanently address maritime insecurity would lead to a reversal of the issuance of War Risk Insurance being charged on cargoes and vessels headed for ports in the GoG region.

Paying for insurance at War Rates

War Risk Insurance is coverage provided on losses resulting from events, such as war, invasions, insurrections, riots, strikes, and terrorism. War risk insurance is offered as a separate policy, as it is excluded from standard insurance policies due to the high risks involved.

Due to the frequently reported cases of piracy in the Gulf of Guinea, insurance underwriters charge more to cover vessels that travel through the region because ship-owners who are required to sail in the Gulf of Guinea will have to obtain the approval of their insurer before they can enter these waters.

The obvious consequence of this development has meant higher costs of goods to end users and reduced profit margins, which negatively affect economic development, not just in Nigeria, but in GoG countries, in general.

How are GoG piracy figures reported?

It is important to understand how piracy and other maritime crimes are reported because this has a direct bearing on how decisions affecting the economies of GoG countries are made, including charging of War Risk Insurance on vessels plying these waters.

Piracy data is often used as an indicator of general maritime security in the Gulf of Guinea, but unless it is carefully interpreted, using it could lead to poor responses.

Reports from the International Maritime Bureau (IMB), as well as other sources, such as the Interregional Coordination Centre in Yaoundé, greatly influence public and policy discourse on the state of maritime security in West and Central Africa. Yet, the extent of the threat is disputed and the numbers need to be carefully examined to avoid misreporting the true situation on ground.

For instance, the Nigerian Navy reported 339 incidents of piracy in 2020. But according to the definition of the crime under international law, 214 out of these would not be considered ‘piracy’ but acts of armed robbery, as they took place in Nigerian territorial waters and not on the High Seas.

Incidents of armed robbery at sea are the responsibility of the coastal state if they occur fewer than 12 nautical miles from the coast. The location of attacks is therefore significant, both to interpreting the data and crafting responses.

Effective law enforcement far out at sea is beyond the capacity of most regional states. This means that any solution to the problem of piracy is a collective one requiring multinational support as envisioned in the Yaoundé Agreement of 2013.

A Deep Blue answer?

In any case, the reality remains that the maritime security situation in the GoG could be much improved and to this end, the Federal Government, with the Nigerian Maritime Administration and Safety Agency (NIMASA) at the spearhead, has brought the Deep Blue Project into play.

The Integrated National Security and Waterways Protection Infrastructure, as the Project is otherwise known, was launched by President Muhammadu Buhari on June 10 with the remit to secure Nigerian territorial waters up to the Gulf of Guinea.

The land assets include the Command, Control, Communication, Computer, and Intelligence Centre (C4i) for intelligence gathering and data collection; 16 armoured vehicles for coastal patrol; and 600 specially trained troops for interdiction, known as the Maritime Security Unit.

The sea assets include two Special Mission Vessels and 17 Fast Interceptor Boats, with the air assets comprising of two Special Mission Aircraft for surveillance of the country’s Exclusive Economic Zone (EEZ); three Special Mission Helicopters for search and rescue operations; and four Unmanned Aerial Vehicles.

It is important to note that the Deep Blue Project is the first integrated maritime security strategy in West and Central Africa with the aim of tackling incidents of piracy, crew kidnappings for ransom, and other maritime crimes.

Reality on ground

Amidst the reduced piracy incidents in Nigerian waters and the Gulf of Guinea since February, when NIMASA deployed assets under the Deep Blue Project, the Agency’s Director General, Dr. Bashir Jamoh, has called for an end to the charging of War Risk Insurance to Nigeria-bound vessels.

Speaking during the recent official flag-off of the DBP, Dr Jamoh said: “Since the deployment of the Deep Blue Project assets in February, there had been a steady decline in piracy attacks in Nigerian waters on a monthly basis.

“We, therefore, invite the international shipping community to rethink the issue of war risk insurance on cargo bound for our ports. Nigeria has demonstrated enough commitment towards tackling maritime insecurity to avert such premium burden.”

Although, according to Dr. Jamoh and Industry-watchers alike, piracy in Nigerian waters is waning, stakeholders in the industry are worried that offshore underwriting firms still insist on very high premiums be paid by companies conveying cargoes to the GoG area.

While the Deep Blue Project enters implementation stage, NIMASA will not be complacent as it will continually evolve strategies, including wide consultation with stakeholders and application of cutting edge technology, in the fight against maritime insecurity.

Amuta is a staff of the Public Relations Unit, Nigerian Maritime Administration and Safety Agency (NIMASA).