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Ship underwriters widen Somali piracy threat zone

Reuters Africa
Teusday 21 Dezember 2010
By Jonathan Saul

- London's marine insurance market has widened the stretch of waterways deemed at high risk from Somali pirates as the armed gangs strike further out at sea, industry officials say.

The move is expected to raise insurance premiums for ship owners, reflecting the growing pirate threat.

Pirates are making tens of millions of dollars in ransoms from seizing merchant ships in the Indian Ocean and the Gulf of Aden, despite the efforts of foreign navies to clamp down on such attacks.

In recent weeks, pirates have struck as far south as Tanzania and Madagascar, with the easternmost attack yet this month close to the coast of India.

"There is no question the pirates have got big mother ships out there," Neil Roberts, a senior technical executive with the Lloyd's Market Association (LMA), told Reuters.

"These are long range vessels which can support operations much further off Somalia," said Roberts, whose association represents all underwriting businesses in the Lloyd's insurance market.

The Joint War Committee, which groups syndicate members from the LMA and representatives from the London insurance company market, last week added the Gulf of Oman and a wider stretch of the Indian Ocean to a list of areas it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils.

"We are recognising the developing threat that is out there. Ship owners are on their own to some extent at the further reaches," Roberts said.

"It's our job to notify when there is a problem and there certainly is," he said.

Analysts said merchant shipping faced mounting costs.

"The number of hijackings is increasing, and insurers will presumably have to charge more in order to be able to financially absorb the greater cost of claims," said John Drake, senior risk consultant with AKE Ltd.


J. Peter Pham, an African security adviser to U.S. and European governments and private companies, said ships transiting the western Indian Ocean were likely to see an increase in insurance premiums.

"I would anticipate that the cost of piracy 'riders' on insurance will rise to reflect this real risk over a larger area," he said.

Despite successful efforts to quell attacks in the Gulf of Aden, international naval forces have struggled to contain piracy in the Indian Ocean owing to the vast distances involved.

This has led to mounting worries among ship owners and seafarers who feel their lives are in the firing line as pirates launch increasingly violent attacks.

"The threat to seafarers who have to run a gauntlet of small arms fire and risk of capture and incarceration is unacceptable," said Peter Hinchliffe, secretary general of the International Chamber of Shipping, which represents about 80 percent of the global industry.

Some shipping companies and a growing number of mariners are backing the use of private armed guards on board vessels.

"We are now not opposed to the use of armed guards on ships," said Andrew Linington, with seafarers' union Nautilus International.

"With this massive expansion of piracy areas, it becomes more essential that seafarers have some form of protection. There is only so much naval forces are  able to do."

Source: Reuters