Wednesday, 5 January 2011

Insurance premiums set to rise as pirate zone widened by Joint War Group

Ecoterra says owners using ‘relaxed negotiation strategy’ with pirates

Marine insurers have included larger swathes of the waters off Somalia in high risk areas following the recent escalation of pirate attacks that now cover a huge expanse of the Indian Ocean, Gulf of Oman, and the Arabian Seas. The latest developments mean that ship-owners will have to pay higher premiums whenever their ships enter these waters.

Pirates have attacked and taken ships recently from as far south as Tanzania and Madagascar and off both the eastern and western parts of the Arabian Sea, from the coast of Oman 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, that represents the Lloyd’s insurance market, told Reuters. He added, “These are long range vessels which can support operations much further off Somalia."

With the number of hijackings increasing and ransom payments going through the roof, the Joint War Committee, comprising of the LMA and other members from the insurance industry, has added wider areas of the Indian Ocean and the Gulf of Oman to the high risk zone- in which ships are exposed to greater risk of 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.

Meanwhile, Ecoterra, the human rights group working in Somalia since 1986, says that more ship-owners are resorting to a ‘relaxed negotiation strategy’ with the pirates, ‘since the public is no longer shocked over the plight of hostage seafarers.’ This has meant that pirates have changed strategy and now use larger vessels as mother ships, putting their crews to greater abuse. Ecoterra says that ships from India, Yemen and Iran are regularly ‘commandeered for further piracy actions. In all cases the abducted crews are abused as human shields.” Amongst the known mother ships on date are the FV Shiuh FU No.1, MT Motivator, MV Hannibal and IMV Izumi, the last three operating in the Indian Ocean.

Ecoterra says that official figures “count only high-value, mostly British insured vessels”. It says that as of Dec 27 2010, there are at least 41 foreign vessels, 1 barge and at least 722 seafarer held hostage by pirates in Somalia.

In related developments over the last few weeks, more and more ship-owners seem to be using armed guards as they cost less than expensive detours in a region in which piracy is now widespread. Seafarer organisations like Nautilus International endorse this move. "We are now not opposed to the use of armed guards on ships," said Andrew Linington from the UK based seafarers' union. "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."

Other industry voices are getting increasingly critical of the official response to the menace. "The threat to seafarers who have to run a gauntlet of small arms fire and risk of capture and incarceration is unacceptable," says Peter Hinchliffe, Secretary General of the International Chamber of Shipping.


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