High piracy attacks push up marine insurance rate

By Piracy

Due to increased piracy attacks in the Niger Delta region of Nigeria, Protection and Indemnity insurers, a maritime insurance association, has raised the rate of war-risk insurance for Nigeria.

Nigerian newspaper Sunday Punch recently reported Nigeria’s classification among high-risk countries in doing international maritime business by the Philippine Overseas Employment Administration.

High piracy attacks push up marine insurance rate

The association had directed that vessels sailing into Nigeria would pay double to engage Filipino seafarers.

The Acting President, Nigerian Ship Owners Association, Aminu Umar, in an interview, lamented the negative implications of the persistent pirate attacks on the maritime sector.

He said, “This problem of piracy is very unfortunate because it is now happening regularly. My insurance broker told me recently that my war-risk insurance had gone up because piracy attacks had been on the increase of late.

“I cannot quantify the impact of this on all of us financially. It will not be easy engaging foreign crew to sail our vessels; they might start turning down jobs.”

Umar said he had also received a mail notifying him of an oil vessel, which was attacked last week with six of its crew members kidnapped.

He added that a Turkish vessel was attacked in the same region prior to the last incident.

He said, “These incidents have put us at a disadvantage because we are now going to pay more for insurance. It will be high for vessels staying permanently on Nigerian waters, especially for those of us who trade here. I expect it will be two or three times the previous amount.

“We intend to take this matter up with the government, especially as we are paying sea protection levy to the Nigerian Maritime Administration and Safety Agency.”

A senior executive with Lasaco Assurance, Adu Gbolahan, said the development would reduce business transactions as regards maritime activities.

He said any region designated as a war risk zone would always attract a higher premium, which eventually would eat into the profit of the shipowner.

He said, “Marine insurance is covered more by foreign companies. The cover is often for the hull of the ships but doesn’t extend to the waterways in the Gulf of Guinea. If anything happens to the ship, the insurance company will be the one to pay the claim and that is why they jack up the premium.

“The shipowners would have to pay more for that service or avoid Nigerian waters, should they decide not to pay. So, it will reduce our business transactions. Some of the big vessels can also decide to stay back off those troubled spots and let smaller vessels come and offload the products rather than venturing into our waters.”

Umar also disclosed plans by the shipowners’ forum, comprising the NISA, SOAN and other independent shipowners, to engage the government on the need to create opportunities for indigenous players in the sector.

He said, “We intend to have meetings with the minister and his team. The maritime sector can be a major foreign exchange earner through freight. Every month, about 70 vessels load crude oil and none is owned by Nigerians. If the minimum freight cost of a crude oil tanker is $4m, if you multiply that by 70 vessels, it tells you the total amount of money we are losing.

“These foreign ships don’t employ Nigerians and don’t pay tax in Nigeria. In fact, the money doesn’t come through our banks. We will be asking the government to support us; let us start with 10 per cent of these 70 vessels. This money will come through our banks. It will generate employment for the masses and we will also pay tax. These are some of the many leakages that should be blocked.”

Source: Punch