slide1 n.
Skip this Video
Loading SlideShow in 5 Seconds..
Download Presentation

Loading in 2 Seconds...

play fullscreen
1 / 26


  • Uploaded on

INSURING MARITIME OPERATIONS, INFRASTRUCTURES AND INTERNATIONAL TRADE Let me start by thanking the organizers of NIMPORT for the success recorded so far in organizing this yearly conference and for the opportunity provided to make a presentation at this conference.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript


Let me start by thanking the organizers of NIMPORT for the success recorded so far in organizing this yearly conference and for the opportunity provided to make a presentation at this conference.

As we may all be aware, insurance is a very important aspect of risk management and with the knowledge that the discussion on maritime operations in any country cannot be complete without reference to marine insurance (through which modern insurance actually started) and its relevance to trade and commerce in general and international trade in particular. There is no doubt therefore, that this forum is best suited to discuss the subject: Insuring Maritime Operations, Infrastructures and International Trade.

international trade
International Trade
  • Exchange of capital, goods, and services across international borders or territories.
  • Represents a significant share of gross domestic product (GDP).
  • Its economic, social, and political importance has been on the rise in recent centuries.
  • Continuously impacted by Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system.
  • Crucial to the continuance of globalization.
  • Without international trade, nations would be limited to the goods and services produced within their own borders.

The Importance of the Maritime Sector

  • The sea and the maritime infrastructure crucial to human development and international trade:
  • Sector plays a very significant role in the socio-economic development of a country.
  • 66% of the world’s population live within 100 km of the coastline
  • Globally, one in every six jobs relate directly or indirectly to the sea.
  • Land-locked countries mainly depend on countries with ports and harbour facilities to either import and export goods.
  • Nigeria has enormous natural maritime resources and a major hub for international trade in Africa.
  • Nigeria Maritime industry contribute significantly to the Gross domestic Product (GDP.
  • The industry has been able to provide channels for flourishing international trade and investments between Nigeria and other nations.
  • Capable of becoming the second highest source of gross earnings (GDP) to our economy if properly promoted and managed. 

Investment in the Nigeria maritime sector accounts for about 90 per cent of the global transportation requirement for the nation.

  • remains a critical infrastructure supporting the nation's economy and international trade. 
  • Sector significant to development and sustainability of the economy. It facilitates local & international trade.
  • Investment potentials cut across mining, manufacturing and service industries;

MARITIME INDUSTRY STRUCTURESector structure composed mainly: - port industry- shipping and ancillary services, - offshore services, - ship building and ship repair, - marine services, - bunkering services, etc.The port industry is relatively the most developed area in the sector. Nigeria accounts for over 65% of total seaborne traffic in volume and value in West and Central African sub-region.

industry stucture cont d

The Major Players….

  • Ship owners
  •  Port /Terminal operators
  • Freight forwarders/handlers
  • Regulatory bodies e.g.  Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Customs
  • Service, Federal Ministry of Transportation, Nigerian Agency for Food and Drug Administration and Control (NAFDAC).
  • Shipping service providers
  • Financial institutions
insurance for the maritime sector

Insurance necessary for the following:

  • Assets
  • Operations and;
  • liabilities

emanating from this all important industry that significantly impacts the economic life of the nation cannot be over emphasized, hence the relevance of this topic at this auspicious time.


Defined as ….

“the act, system, or business of insuring property, life, etc., against loss or harm arising in specified contingencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved”.

“a contract that provides coverage in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract”.

insurance cont d
Insurance cont’d

Insurance contract is set forth in a written or printed agreement or policy. The consideration/amount for which anything is insured is an insurance premium.

  • Entrepreneurs invest resources into the start-up and continuous operation of a business. If the entrepreneur suffers any form of loss, the business die or takes a long time to recover. Insurance is therefore very important to the business continuity  
  • The principle of indemnity ensures that an entrepreneur receives enough compensation to continue the business with minimum effects.
marine insurance
  • A contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby by agreed, against marine losses, i.e. the losses incident to marine adventure.
  • Covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.
  • There are various types of Marine insurance such as Cargo, Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines);Marine Hull; Marine Casualty; and Marine Liability.
marine insurance cargo
  • Sub-branch of Marine Insurance & Occupies an important position in international trade.
  • Primarily concerned with the protection of ocean-going cargoes
  • Also covers against
    • Hazards associated with connecting land conveyances and;
    • Risks involved in shipments by rail or air.
  • Its simplest form provides cover against accidental damage and other maritime risks. The other extreme is a comprehensive all-risk policy, covering a range of specified accidents - including damage during loading, theft and negligence.
  • Cargo insurance is so important to both local and international trade that the Government of Nigeria had to come up with a national policy on same.
marine cargo insurance what the law says cont d
MARINE CARGO INSURANCEWhat the Law says Cont’d
  • Promulgation of Decree no. 2 of 1997 addressed the problem
  • Section 76: An insurance of goods to be imported into Nigeria shall be made with a Nigerian registered insurance company.
  • This position is further reinforced in Section 67 of the Insurance Act of 2003.
  • Thus the Law in Nigeria is that all cargoes being imported into Nigeria must be insured in Nigeria by Nigerian insurance companies.
  •  The Law need to be effectively enforced.
marine hull insurance
  • Marine Hull insurance covers almost everything that floats or moves on water starting from ordinary rowing boats to the massive ocean tankers, including non-propelled objects such as floating docks, buoys, transshipment barges and floating accommodations.
  • Policy also insures vessels under construction or conversion.
  • Protects the vessel including the hull, machinery, gear and equipment against loss or damage on all risks basis.
  • Ship owners may also be able to claim for their ship’s share of salvage, salvage charges and general average, depending on the policy wording.
marine hull insurance related covers
  • The Marine Hull and Machinery policy is the basic insurance required by vessel owners and ship operators. Other related insurances are analysed below
    • Disbursements, Freight, Increased Value (IV)
  • Vessel owners would be entitled to claim certain amount of money (which must have been agreed beforehand) in excess of insured value of your vessel in case she will be a total loss, whatever actual or constructive.
    • Loss of Hire (LOH)
  • Ship operators need money to run ship and expects some profit from her operation as well.
  • No income once ship is not working, hence so need for LOH insurance.
  • LOH Insurance will compensate daily amount (as may have been pre-agreed) whilst ship undergoes repairs following an accident covered under H&M insurance.
  • Cover subject to time excess of about 14 days.

Mortgagees' Interest Insurance (MII)

  • Normaly demanded by bankers and other financiers (or mortgagees).
  • Protects the mortgagees' interest in the insured vessel in case H&M underwriters refuse to settle a claim due to breach of warranty stated in H&M policy.
  • e.g. H&M Policy allows vessel to sail only within the West African coastal waters, but the vessel ends up in collision in the north sea – the H&M policy will turn down the claim but the MII policy will protect mortgagees' interest anyway.
  • Builders' Risks
  • For the vessel under construction.
  • Cover is normally against all risks of loss or damage to vessel whilst under construction or conversion and during trials and would include certain liability risks as well.
  • This insurance is normally taken by ship builders.
marine liabilities
  • Liabilities associated with maritime operations are in various forms.
  • Some relate directly to vessels and cargoes.
  • Others have to do with the ownership and operations of jetties, harbours, etc.
  • Some of the insurances associated with marine liabilities are:

Charterers Liability

  • Protects charterers of vessels from a range of liabilities, either through contract or in tort. Cover can include liabilities resulting from damage to the vessel itself, or from third parties directly or by way of indemnity.

Port, Harbour and Terminal Operators Marine Package Policy

Terminal operators may have to take out insurance policies, either under the terms of operating agreements entered into between them and port authorities; as a result of the terms of terminal tariffs previously drafted by such authorities; according to the liability and indemnity clauses inserted in contracts agreed upon with particular users; or simply because the terminal operator not able to bear the consequences of the materialization of one risk, decides to transfer it to a specialized company (i.e. insurance company).

Ship Repairers Liability

Insurance that protects a ship repairer from liabilities whilst the vessel is under their care, custody and control.


Designated Persons Ashore Personal Professional Indemnity

In an accident where pollution, damages or injury occur, the Designated Person can be held personally responsible. This insurance covers a DP’s liability from professional negligence, the “contingent liability” of a claim that would normally be covered by their employer’s P&I policy and legal expenses to defend a claim.

Marine Pilots Liability

This insurance provides cover against claims made against marine pilots. Cover extensions are available for third party liability and personal accident.

Ship Brokers, Ship Agents and Ship Managers Liability

Cover to protect transport intermediaries against claims for negligence and error or omission.



  • For marine surveyors, consultants, architects, ship managers and other marine professionals. The insurance covers claims arising from legal liability and errors & omissions in the exercise of the insured’s professional duties. Cover extensions include third party liability and liability for fines and duty.
  • Protection and Indemnity insurance, or “P&I” , is a shipowner’s insurance cover for legal liabilities to third parties.
  • Provides cover for the property, equipment, liabilities and financial exposures of port authorities, as well as the port, harbour and terminal operators who work there.
  • Cover extensions are available for excess protection and indemnity, removal of wreck, and fines and penalties.


  • Usually arranged by entering the ship in a mutual insurance association, usually referred to as a “club”.
  • Ship-owners are members of such clubs.
  • Legal liability is decided in accordance with the laws of the country where an accident takes place.
  • Cover for contractual liability is agreed at the time the owner requests insurance cover from the club usually in accordance with the owner’s responsibility under crew contracts or special terms relating to the trading pattern of the vessel.
  • Protection means the insurance also covers assistance when a ship is involved in an accident and the shipowner and his Master need help. Club’s early intervention and assistance will help to head off problems and serve to protect the Ship-owner from inflated claims.

“INDEMNITY”P&I insurance is an indemnity type of insurance, which means the ship-owner (or member of the club) must demonstrate his loss before the club will pay out (or indemnify him) under the terms of the insurance policy. It is important to bear in mind that the club never assumes the owner’s liability, therefore technically the owner (ormember) is always responsible for payments (the “pay to be paid” principle). In practice, the club takes over the business of handling claims and ensuring that payments are correctly made.


COVERAGE INCLUDE:- Collision with Fixed or Floating Objects (FFO)The P&I cover may include liability for collisions (“RDC”), for example when the member’s ship is in collision with another ship, or when the entered ship strikes a fixed object, i.e. a quay, dock or buoy.- Death and Personal Injury on Board The VesselP&I insurance covers an owner’s liability for all deaths,personal injuries and illnesses which occur on board, includingdeath or injury to crew, passengers, stevedores, pilotsand visitors to the ship.Repatriation of Sick or Injured Crew and Hospital ExpensesP&I insurance also covers a shipowner’s liability to pay for the costs of repatriating crew members who become sick or are injured on board. The insurance also covers the crew’s hospital bills and costs of sending replacement personnel to the ship if necessary.


Loss of Crew Members’ Personal EffectsP&I insurance also covers the owner’s liability for loss of crewbelongings in cases of shipwreck or fire on board. The cover onlyapplies to items which are deemed to be reasonable for any crew member to have with him on board. Loss of or Damage to CargoOne of the major functions of Protection and Indemnity insurance is to cover a shipowner, or the charterer of a ship, for liability for loss of, or damage to, cargo if there has been a breach of the contract of carriage. This breach of contract usually means that something has happened to the cargo while it was on board the ship or being loaded or discharged, and for which the owner or charterer can be held responsible.


Other P&i Covered RisksOther risks covered include liability for stowaways, liability for oil pollution and other types of pollution and legal liability for wreck removal if the ship sinks and is blocking free navigation for other vessels. In short, P&I insurance is a very comprehensive type of insurance cover which makes it easier for a shipowner or charterer to trade in international shipping transportation. P&I is as important to a prudent shipowner as his Hull and Machinery insurance cover. SUMMARYP&I is a special type of marine insurance. It is a liability insurance that a prudent shipowner, manager or charterer needs, particularly if the ship is employed in by the multinational companies such as oil companies or for international trade. P&I insurance covers a shipowner or charterer for liabilities and losses in direct connection with the operation of the ship.


IGI and P&I

IGI is aware of the difficulties ship owners go through before they get admitted into P&I Clubs which are mainly administered from Europe and America. The company is also not unaware of the heavy contribution required on year to year basis in maintaining membership of P&I clubs.


IGI has therefore established a simplified relationship with a P and I Association called the East of England Protection and Indemnity Association, which has given her the capacity to admit members and take appropriate decisions.

We are now able to admit both the vessels operating in brown water and blue water into the Club up to a limit of liability of $100m any one vessel. For this purpose, we also confirm that the capacity of the Association is also fully backed by underwriters from the Lloyds of London. We are open to assist you in this regard and with regard to conventional insurance policies at any time, starting from this conference.