In the world of global shipping, insurance isn't just paperwork; it is infrastructure. It determines who can trade, under what conditions, and at what cost. For Nigeria, a nation whose maritime trade is vital to its economy and whose oil and gas exports define its fiscal health, the lack of a local Protection and Indemnity (P&I) insurance solution has long meant paying the price, both literally and strategically, for relying on foreign systems to cover Nigerian risks.
The Nigerian maritime industry depends almost entirely on foreign P&I clubs, especially those within the International Group of P&I Clubs (IG). These clubs insure a significant share of the world's ocean-going tonnage. While they have a long track record of financial strength and claims handling, they also operate in jurisdictions far removed from the realities of Nigerian trade. This dependence comes at a cost.
Because risk is assessed and priced abroad, local nuances, compliance efforts, and safety investments may be overlooked in the risk scoring process. Worse still, the economic value of those premiums, typically denominated in foreign currency, exits Nigeria entirely, contributing nothing to domestic capacity, training, or claims infrastructure.
Why This Matters for Trade
Marine insurance, especially P&I, is one of the core enablers of maritime commerce. Without it, vessels can't sail or dock. Cargoes can't move. Port authorities can't risk exposure. For Nigeria's shippers, carriers, and port operators, foreign-dominated marine insurance creates a fragile situation, where local trade depends on external underwriters with no direct stake in the country's economic or infrastructural outcomes.
It also weakens Nigeria's ability to influence international shipping decisions and respond to incidents that occur in its waters. When claims arise, they are processed offshore. When risk profiles are updated, they're benchmarked abroad. Nigeria participates in global trade but does not shape the risk frameworks that govern it.
A Nigerian P&I mutual — especially one rooted in the oil and gas sector — would begin to change that. Unlike traditional insurers, mutuals are owned by their members, who are both the insured and the beneficiaries of any surplus generated. This structure encourages a deeper alignment between risk exposure, underwriting decisions, and claims culture.
By localising P&I insurance, premiums could reflect local safety improvements, compliance levels, and investment in infrastructure. Additionally, claims handling could be faster and better aligned with domestic maritime law and dispute resolution mechanisms. Capital would also remain in-country, supporting local financial services, legal expertise, and marine loss adjustment capacity.
It would also stimulate growth in ancillary industries like marine surveying, dispute resolution, and claims management, helping to expand the country's knowledge base and create high-skill jobs tied to the maritime economy.
This wouldn't mean abandoning foreign P&I clubs altogether. But for domestic and regional trade, particularly in West Africa, a local P&I solution would offer cost-effective coverage grounded in Nigerian realities.
Nigeria would not be the first emerging market to take this step.
While Japan and China established local P&I clubs before the 21st century, other markets are proving that it is possible to do it today. Turkey, for instance, established Türk P&I in 2014, which began with strong government backing and now covers thousands of vessels, including international ships. Today, it has insured over 12,000 ships and has correspondents in over 45 countries.
India is making progress towards the establishment of a domestic P&I club for vessels operating within its inland waters. In late 2024, India's Directorate of Shipping issued a tender to choose a consultant that would carry out the feasibility study for the creation of its own club after stakeholder engagements held earlier in the year.
Each of these countries recognised that insurance isn't just a product. It is a strategic lever.
The Real Risk Is Inaction
With the rise of indigenous oil and gas companies, the establishment of the Ministry of Marine and Blue Economy, and the expanding mandate of the Nigerian Content Development and Monitoring Board (NCDMB), Nigeria has the policy momentum and institutional architecture to launch a credible, sector-led P&I solution.
The key lies in starting with a focused model, one that targets vessels operating in the upstream sector. These vessels are already subject to local content requirements. They already operate within a compliance-heavy environment and they represent a substantial portion of the premiums currently flowing offshore.
A well-structured mutual, backed by legal reform, phased capitalisation, and engagement with global reinsurers, would offer Nigeria a platform to build maritime risk expertise, retain capital, and negotiate global insurance relationships from a position of strength.
It would also signal to the world that Nigeria is no longer content to be a passenger in global marine trade. It is ready to chart its own course, not just with ships, but with the systems that protect them.
As the world shifts in response to geopolitical disruptions, trade route volatility, and climate-linked insurance recalibrations, Nigeria can no longer afford to be a passive participant in marine risk management. Relying entirely on external underwriting is not just expensive, it is economically limiting and legally disempowering.
The path forward is clear: build local capacity, retain local value, and give Nigeria's maritime trade the domestic insurance infrastructure it needs to compete, grow, and lead in the region.
A local P&I insurance solution isn't an end in itself. It's a lever, one that, if pulled now, can reposition Nigeria not just as a port of call, but as a country that defines how those voyages are secured.
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