N270b Annual Loss: Stakeholders in Talks on Cargo Insurance Certification

In a bid to deepen insurance penetration in Nigeria’s economy, insurers, the banking sector and other relevant stakeholders are in talks on how underwriters can realize additional N270 billion yearly premium income from importations at the gateway. Read also: USA Air Consolidation Redefined

An analysis by The Guardian showed that if the proposed plan materialises, it will ensure that about 45 million cargoes coming into the country through Nigeria’s seaports on yearly basis have genuine marine cargo insurance certificates.

With marine cargo insurance not part of the compulsory insurances, importers have been negligent 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 yearly.

This leaves 60 per cent, translating to about 27 million cargoes that were either not insured or parading fake insurance certificates, as racketeers flood seaports and major centres where shipping activities are carried out, thereby making billions of Naira yearly from their shady deals. Read also: Goods under NAFDAC Regulation

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.

Cargo insurance is classified into three categories- ICC ‘A’, which has the most risk covered, while ICC ‘B’ and ICC ‘C’ have less insurance coverage. An importer is expected to choose the one best suits the purpose.

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, findings showed 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 for 27 million cargoes.

Moreover, some cargoes are worth more, hence, the insurance industry could be losing more than the estimated N270 billion per annum. Read also: HOW CAN I CLEAR MY GOODS / CONSIGNMENT IN LAGOS "NIGERIA"

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.

Investigations also show 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. Read also: FG Orders Seaport Terminal Closure

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.

However, 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 Central Bank of Nigeria 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).

About the Blogger: Valuehandlers is a professional Freight forwarder specializes in Air & Sea shipping, Customs clearing and cargo delivery from and to Nigeria for Packages, Item, Equipment, Machines, Raw materials, Dangerous goods, Personal effects, trucks and Cars, etc. from more than eighty (80) countries.

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