There are ongoing discussions between insurers and the Central Bank of Nigeria (CBN), the banking community and other relevant stakeholders that will yield additional N270 billion annual premium income from importation into the nation’s insurance industry.
Investigation shows that if the proposed plan materialises, it will ensure that about 45 million cargoes coming into the country through Nigeria’s seaports annually have genuine marine cargo insurance certificates.
Cargo insurance, a type of marine Insurance, is underwritten on the Institute Cargo Clauses, with coverage on an A, B, or C basis, A having the widest cover and C the most restricted.
With marine cargo insurance not part of the compulsory insurances, importers have been lax about insuring their cargoes, with sources in insurance sector putting the number of cargoes with genuine insurance coverage at about 40 per cent of the entire cargo throughput entering the ports annually.
This leaves 60 per cent, translating to about 27 million cargoes that were either not insured or parading fake insurance certificates, as fake insurance racketeers flood seaports and major centres where shipping activities are carried out, thereby, making billions of Naira annually from their shady deals.
And with Customs relaxed on checking insurance certificates, importers were only procuring insurance cover when they felt it was necessary.
The Nigerian Ports Authority (NPA) had earlier disclosed that 45.1 million cargo throughput came into the country’s seaports in 2018, while 43 million cargo throughput were recorded in 2016 and 2017 respectively.
We learnt that cargo insurance is classified into three categories, such as ICC ‘A’ which has the most risk covered, with ICC ‘B’ and ICC ‘C’ having less insurance coverage. An importer expected to choose which one best suits him.
Although, there is no fixed premium for marine cargo insurance, as the price is determined by some factors, mainly the worth of the goods in a cargo, our findings show that the least valued cargo is worth N5 million. The insurer demands 0.2 per cent of the N5million, translating to N10,000 premium per cargo.
This means insurance companies in the country continue to lose approximately a minimum of N270 billion from non-purchase of original cargo insurance certificates by 27 million cargoes.
Moreover, some cargoes are worth more, hence, the insurance industry could be losing more than the estimated N270 billion per annum.
For years, the existence of fake marine insurance in the maritime sector is giving insurance operators sleepless nights, while non-insurance of some cargoes by importers remains a challenge for revenue generation of insurance companies.
Investigation shows that the fake insurers issue fake marine certificates to customers at major centres where shipping activities are carried out across the country.
Further findings reveal that one can get a fake Insurance Cargo Clause ( ICC) “C” marine insurance cover, which is the minimum marine cover, for N2,500 notwithstanding the Insurance value.
It was learnt that most of these fake certificates bear the names and logos of registered insurance companies, even though these insurers knew nothing about these dirty deals, others use fake names to cajole the unsuspecting importers, as these policies were being sold at a cheap price.
But all these are expected to change with the launch of the new platform that would ensure no cargo carries fake insurance or remain uninsured. To realise this ambition, investigation shows that insurance companies, under the auspices of the Nigerian Insurers Association (NIA), are already working on a unified platform specifically for marine insurance cover.
The platform, when operational, will be the only platform to which Customs will be using to check the genuineness of any marine insurance certificates, including cargo insurance.
The new platform is also expected to link several relevant platforms, such as that of the CBN and Customs, thereby, increasing the premium income of the Nigerian insurance industry as well as the contribution of the sector to the nation’s Gross Domestic Product (GDP).
While market observers see this as good news, because racketeers are reaping from where they did not sow, they expect improvement in business inflow from the marine sector just as the Nigerian Insurance Industry Database (NIID) platform leads to increase in purchase of genuine motor insurance certificates.
The director-general of NIA, Mrs. Yetunde Ilori, said the association was looking at exploring CBN-coordinated platform which also includes Customs, banks and other stakeholders in the marine business generally to boost the sale of genuine marine insurance covers.
She disclosed that a new platform had been developed specifically for this purpose, even as Customs would be using this platform to ascertain the genuineness of any marine insurance certificate, thereby leading to rapid rise in the sale of marine insurance policies.
According to her, “A platform has been developed, just like we have for Motor now, and it is going to be compulsory that Customs would be checking marine policies through the platform. Once we propose and the banks and every stakeholder buys into it, we will launch.
“The industry is not getting much marine insurance business now because it is not compulsory and nobody is checking it, but when this platform becomes operational; the banks, where importers get their Form M, and Customs are using it, marine insurance uptake will grow since various agencies are now involved in enforcement.”
Explaining the reason for fake insurance at Nigerian ports, the Past Commissioner for Insurance, Alhaji Mohammed Kari, had, during his tenure, said the Customs still has problems with marine insurance. Most of the insurance covers that are taken to cover imports into Nigeria, according to him, are expected to be insured by Nigerian insurance operators, but unfortunately, the Customs Service does not have the facility to identify fake insurances.
“So what they do is that, once they cannot confirm if insurance is fake or where there is no insurance, they just add the value of insurance to calculate the CIF but they don’t pursue the insurance aspect which is a big loss to insurance and the Nigerian economy,” he said.