The Sea Empowerment and Research Centre (SEREC) has urged the Federal Government to engage international insurance providers to reassess the risk profile of Nigerian waters and renegotiate premiums.
Mr Eugene Nweke, SEREC Head Researcher stated this in a communiqué issued on Wednesday in Abuja.
The communiqué is themed “three years zero piracy attacks on Nigeria-bound vessels at the gulf of guinea: focus on the opportunity costs within.
Nweke said that the recent celebration on Nigeria’s zero piracy incidents within three consecutive years under the Deep Blue Project at the Gulf of Guinea was a notable achievement.
He however, said it was essential to examine the opportunity costs associated with the success.
According to him, the annual payment of $500 million is a significant financial burden on Nigeria, and efforts to reduce or eliminate these premiums could have substantial economic benefits.
“Nigeria paid over $1.5 billion in war risk insurance premiums to international insurers in the past three years, which translates to approximately $500 million per year.
“This annual payment of $500 million is a significant financial burden on Nigeria and despite success in eliminating piracy international insurance giants continues to impose high premiums on Nigeria-bound ships.
“With estimates suggesting over $1 billion in annual revenue from these premiums this has led to concerns that the opportunity cost of maintaining zero piracy incidents might be perpetuating the war risk insurance regime.” he said.
Nweke said that the war risk insurance premiums posed substantial financial burden on Nigeria which called for concern.
He said that the Nigerian Maritime Administration and Safety Agency (NIMASA) campaign to abolish these premiums, citing Nigeria’s improved security status and elimination of piracy in its waters was apt.
He commended NIMASA’s efforts and urged the leadership of the agency to engage international insurers to reassess Nigeria’s risk profile and adjust premiums accordingly.
According to him, by doing so, Nigeria can potentially save significant amounts on war risk insurance premiums and redirect these resources to more pressing economic development needs.
“Considering the potential trade-offs and opportunity costs associated with maintaining zero piracy incidents is crucial for the progress of the maritime industry.
“SEREC research indicates that significant investment in the deep blue project may have diverted funds from other crucial areas for development in the sector.
“By renegotiating premiums there would be more resources to upgrade port facilities, improve logistics, enhance transportation networks to boost economic growth and facilitate trade.
“Also adequate funds to increase investment in the fisheries sector for higher fish production, improved livelihoods for fishermen, and enhanced food security,” he said.
Nweke called for development and upgrade of maritime infrastructure, such as jetties, ports, and shipping facilities to support economic growth and reduce congestion in ports.
He said all these would be achieved when the cost for risk insurance was renegotiated, reduced or eliminated
He called for transparency in maritime security operations and incident reporting to demonstrate the effectiveness of the deep blue project.
He also urged the government to prioritise investments in maritime infrastructure, such as port modernisation and digitalisation to enhance efficiency and reduce costs.(NAN)
