The Case for Establishing a Nigerian P&I Club

Nigeria’s recent election back into the Council of the International Maritime Organisation, after 14 years, marks more than a diplomatic milestone.

After over a decade outside the world’s most influential maritime decision-making body, the Country has regained a formal voice in shaping global shipping standards, safety norms, and regulatory priorities. Yet, this renewed visibility also raises a more challenging question.

Representation in maritime governance is one thing, control over the financial and legal architecture that underpins global shipping is another.

At the heart of that architecture sits Protection and Indemnity insurance. P&I cover determines how liability is allocated in the event of a collision, an oil spill, cargo damage, or seafarer injury. It governs how claims are handled, which legal systems adjudicate disputes, and where premiums and reserves ultimately reside. In modern shipping, P&I insurance is not a peripheral service; it is core infrastructure.

Nigeria occupies a paradoxical position in this system. It is the largest maritime economy in West Africa, a major offshore oil and gas producer, and a key gateway for regional trade. Its ports, anchorages, and offshore fields host thousands of vessel movements each year. Yet the liabilities arising from these activities are still overwhelmingly insured, priced, and managed outside the country. Nigerian waters generate risk, but foreign institutions define and absorb it.

This imbalance is not unique to Nigeria. It is a recurring feature of emerging maritime states, where physical shipping capacity has expanded far faster than domestic insurance institutions. As a result, many countries exercise operational control over their maritime domains while remaining financially dependent on external P&I clubs. The question Nigeria now faces, especially as it returns to the centre of global maritime governance, is whether it will continue to accept this dependence or begin the transition toward underwriting its own maritime risks.

Global Models and the Regulation of P&I Insurance

Globally, P&I insurance is dominated by mutual associations rather than conventional insurers. The International Group of P&I Clubs, headquartered largely in Europe, provides liability cover for the majority of the world’s ocean-going tonnage. These clubs operate on a mutual basis, pooling member contributions, sharing losses, and purchasing collective reinsurance for catastrophic claims. Their structure reflects the unique nature of maritime liability, which is long-tail, volatile, and often cross-jurisdictional.

What matters for emerging markets is not simply that these clubs exist, but how the legal systems that host them are designed. In traditional maritime jurisdictions, the mutual design is explicitly recognised in law and regulated separately from standard corporate insurers. This legal accommodation allows P&I clubs to operate with flexible capital arrangements, member calls, and loss-sharing mechanisms that would be difficult to sustain under conventional insurance regulation.

Other maritime hubs have taken different but equally deliberate paths. Singapore, for example, has not built a dominant domestic P&I club, but it has aligned its insurance regulation, maritime administration, and arbitration framework to attract global marine insurers and claims activity. Japan operates a hybrid model, with its domestic P&I club supported by a legal and policy environment that recognises mutuality while integrating closely with national shipping interests. In each case, the lesson is consistent. Successful maritime insurance ecosystems are the product of regulatory intent and institutional coordination, not market forces alone.

What these models share is an understanding that P&I insurance cannot simply be forced into the mould of conventional insurance law. Mutual liability pooling requires regulatory flexibility, legal clarity, and, often, early support from the state or industry. Where these conditions exist, domestic P&I capacity can develop over time. Where they do not, maritime risk remains exported indefinitely.

Nigeria’s Legal Landscape and the Mutual Gap

Nigeria has made notable progress in modernising its insurance and maritime sectors. The Nigerian Insurance Industry Reform Act introduced risk-based capital standards, stronger supervisory powers, and improved governance requirements. Maritime oversight has been strengthened through institutions such as the Nigerian Maritime Administration and Safety Agency, while local content policies in the oil and gas sector signal a clear intent to retain value domestically where capacity exists.

Yet within this evolving framework lies a critical omission. Nigerian insurance law recognises insurers only as limited liability corporate entities. There is no explicit legal recognition of mutual insurance associations, particularly those designed to pool high-value maritime liabilities. This single structural constraint has far-reaching consequences. P&I insurance, by its nature, relies on mutuality. Without a legal pathway for such entities to exist, Nigeria cannot realistically establish a domestic P&I club, regardless of shipping volume or demand.

The result is a regulatory paradox. Nigeria has strengthened its insurance sector, but in doing so has inadvertently closed the door on the very structure that dominates global marine liability insurance. Local content provisions may require risks to be placed domestically where capacity exists, but capacity cannot develop where the legal form itself is prohibited. Brokers may mediate placements, but brokerage does not equate to localisation. Premiums, reserves, and claims expertise still flow outward.

This gap is compounded by institutional fragmentation. Insurance regulation, maritime administration, port operations, and shipping policy sit across multiple agencies with overlapping mandates. While this is not unusual, it does mean that transformative reforms require coordination rather than isolated action. Without a shared vision for maritime risk retention, piecemeal progress will continue to fall short.

Thus, the case for a Nigerian P&I club is not an argument for disengagement from the global system. It is a call for more balanced participation. Establishing such a club would require targeted reforms rather than a wholesale legal overhaul. At the centre of these reforms would be legislative recognition of marine mutuals as a distinct class of insurer, regulated in a manner that reflects their unique risk profile.

Beyond legal reform, the strategic benefits are considerable. A Nigerian P&I club would retain premiums within the domestic financial system, deepen local actuarial and legal expertise, and accelerate claims resolution under Nigerian law. It would also position Nigeria as a regional anchor for maritime liability insurance, particularly as intra-African trade expands under the African Continental Free Trade Area (AfCFTA). West Africa currently lacks a credible regional P&I platform, and Nigeria is uniquely placed to fill that gap.

Capacity-building would extend beyond insurance. Maritime arbitration, claims adjustment, and maritime legal practice would all benefit from a domestic liability hub. Over time, this ecosystem would reinforce Nigeria’s standing in global maritime forums, transforming its role from participant to contributor.

From Representation to Risk Leadership

Nigeria’s re-election to the IMO Council signals renewed international confidence in its maritime leadership. But leadership in today’s shipping industry is measured not only by seats at the table, but by control over the systems that allocate risk and capital. P&I insurance sits at the intersection of law, finance, and maritime operations, and it is where sovereignty quietly resides.

The Country already carries the cargo, hosts the vessels, and regulates the waters. What it does not yet control is the liability architecture that governs what happens when things go wrong. Establishing a Nigerian P&I club would not be a symbolic gesture but a structural shift, aligning Nigeria’s maritime ambitions with the financial institutions required to sustain them.

The opportunity is clear, the timing is favourable, and the foundations are already in place. The remaining question is whether Nigeria will choose to convert maritime scale into maritime authority. The case for doing so has never been stronger.