ARTICLE
20 October 2025

Can Nigeria Stem Its $1.5 Billion Losses To Foreign Marine Insurers?

PM
PYE·M Systems

Contributor

Pye-M Systems specialise in setting up and providing mutual advisory support for ship owners, charterers, operators, and other stakeholders within the maritime industry, with a focus on facilitating risk pooling and risk retention.

Nigeria has lost over $1.5 billion to foreign marine insurers in just three years. That's not a projection.
Nigeria Transport

Nigeria has lost over $1.5 billion to foreign marine insurers in just three years. That's not a projection. It is an official figure from a March 2025 statement by the Nigerian Maritime Administration and Safety Agency (NIMASA), pointing to the scale of outflows from shipping risks placed entirely abroad.

Marine insurance covers a broad risk category, from hull and cargo to crew injury, pollution and wreck removal. Within this space, protection and indemnity (P&I) insurance represents one of the most critical components, offering liability cover for third-party risks that standard policies do not address. P&I is what pays when oil spills occur, when seafarers are injured, when collisions happen, and when fines are imposed on shipowners. It is one of the largest, most sophisticated branches of marine insurance. Yet, in Nigeria, it is entirely imported.

This exists even though Nigerian law already requires local insurance placement. The Nigerian Oil and Gas Industry Content Development Act (2010) mandates that all insurable risks in the industry must be insured with Nigerian underwriters. Any risk placed offshore must first receive approval from the National Insurance Commission (NAICOM), and even then, only if local capacity has been proven inadequate. But in practice, enforcement has been lax. Risk after risk is placed abroad, legally questionable, economically damaging, and strategically shortsighted.

Nigeria is not a marginal player in global shipping. With over 850 km of coastline, major ports in Lagos, Onne, Port Harcourt, Calabar, and Warri, and a bustling offshore oil and gas industry, the country commands one of the most strategic maritime domains in West Africa. Thousands of vessels operate within our waters annually, from tankers and container ships to offshore support vessels servicing oil and gas platforms. Each of these vessels is required to carry multiple layers of insurance. In markets like the UK and Japan, a large chunk of these premiums is retained domestically through homegrown P&I clubs. Nigeria's entire ecosystem; premiums, claims management, and legal processing, are offshore.

This situation is not just inefficient, it is a missed economic opportunity. Those lost premiums could create jobs for Nigerian insurance professionals, maritime lawyers, and claims adjusters. They could strengthen our financial markets, build our knowledge base, and support a local risk infrastructure tied to the realities of the Gulf of Guinea. Instead, Nigerian risks are underwritten abroad by people without a physical presence here, profiting from liabilities that originate entirely within our jurisdiction.

It is one thing to pay for foreign insurance when it's competitively priced. It is another entirely to continue paying when the real cost has quadrupled and a viable local alternative is possible.

These insurance premiums constitute capital that, if retained locally, would power a financial ecosystem with real economic ripple effects in employment, infrastructure and growth in Nigeria's marine insurance ecosystem.

A Nigerian P&I club would hold and reinvest premiums in the country, hiring local underwriters, maritime lawyers, actuaries, claims specialists, and administrative professionals. It would pay taxes. It would engage with Nigerian banks, law firms, and regulators. It would retain profits that could be reinvested into infrastructure, training, or reinsurance facilities.

Even the NIMASA forecast rightly notes that localising the projected $600 million upstream vessel engagement economy would "positively impact the financial and insurance institutions if a large chunk is retained in the country".

In a country where entire maritime clusters still depend on foreign expertise and capital, localising even part of this $1.5 billion could start to reshape the industry from within.

The Push for a Nigerian P&I Club: A Window Once Open

The idea of a Nigerian P&I club is not new. In 2018, a formal outreach was made to Nigeria's Vice President at the time, making a case for establishing a locally domiciled P&I club that could gradually take on the liabilities currently insured abroad and begin retaining capacity locally. The Vice President understood the merits of the proposal and the significant positive impact this could have on Nigeria's economy.

But momentum is not execution. Despite directives to relevant regulatory agencies, the agencies' conflicting internal priorities ground progress to a halt. Since that directive was issued, Nigeria is estimated to have ceded $4-$5 billion in premiums to foreign insurers.

More than the capital loss, what Nigeria forfeits is capacity.

A local P&I club would immediately create demand for specialist marine professionals: underwriters, loss adjusters, claims handlers, maritime surveyors, and regulatory experts. These are high-value, globally transferable jobs that can elevate Nigeria's maritime sector from operational dependency to strategic autonomy.

Today, these jobs exist, but not in Nigeria. They sit in London, Oslo, and Singapore, servicing Nigerian risks, using Nigerian data, and profiting from Nigerian premiums.

That's not sovereignty. That's rent.

The Clock Is Ticking

The recent waves of U.S. tariffs and the disruptions they've triggered across global trade are a stark reminder of how vulnerable economies like ours remain to decisions made thousands of miles away. Nigeria may not always be the direct target, but we often bear the cost, whether through oil price shocks, inflation, or redirected shipping routes. These moments of volatility highlight a deeper issue: our overdependence on foreign systems, including maritime insurance.

Countries like China and South Korea recognised this a long time ago. With strong policy support, they established their own P&I clubs to protect their shipping industries from external shocks and retain value within their economies. Nigeria must do the same.

Every year, Nigeria loses hundreds of millions of dollars to foreign P&I clubs, money that could be used to build our maritime insurance capacity, create jobs, and support local expertise. It is a quiet but steady drain on our economy, and it's time we did something about it. We don't lack the talent or the insight; what we need now is the collective will to build something of our own.

As someone who has spent years navigating the complexities of maritime law, insurance, and international risk structures, I believe we are at a pivotal moment to reshape the narrative. I am committed to driving this conversation, convening stakeholders, informing policy, and helping lay the foundation for credible, homegrown P&I solutions. Together, we can reclaim value, build resilience, and chart a new course for Nigeria's maritime future.

Originally published April 20, 2025

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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