The document discusses piracy trends in the first quarter of 2009. It notes that while piracy has increased dramatically in Somalia and the Gulf of Aden, it has declined in other areas like Southeast Asia. Specifically, there was a near doubling of ship attacks in Somalia compared to the same period in 2008. However, countries like Indonesia cooperated to reduce piracy in the Malacca Strait, demonstrating that coordinated responses can help address the problem in some regions. The shift to Somalia is concerning since that country lacks an effective government able to police piracy in the same way as Indonesia and other Southeast Asian nations.

1. Piracy
An ancient risk with modern faces
An insurer’s perspective from Allianz Global Corporate & Specialty

2. Foreword Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Introduction
Foreword Introduction
Few risks capture the public imagination like piracy. Since The current wave of piracy is receiving a great deal of
earliest times, organized societies have feared bands of attention. Even if the ability of pirates to capture headlines
lawless robbers in unprotected areas of land and sea. Pirates far outweighs their ability to capture ships, they represent a
also have often represented a law unto themselves, which is very real risk for ships and crews in the regions where they
why stories about them merge that fear with romantic are active. As an insurer, Allianz takes a great interest in
images of rugged individuals. Amid all this emotion, there working with shipping companies to ensure that people,
are hard facts and very real risks. Anyone who has been boats and cargo arrive safely and quickly at their
involved with actual pirates knows the grim reality they live destinations.
in and the damage they can inflict.
Generallyspeaking,pirateattacksareextremelyrare.Therewereroughly300
reportedactualorattemptedpirateattacksworldwidein2008.The92actualor
Today,thehighseasareoneofthelastlawlessfrontiersonearth.Despitethecurrent
attemptedattacksonthenearly20,000largeshipsthatpassedthroughthecritical
Arthur E. Moossmann economicslump,worldwideshippingwillcontinuetogrowoverthelongterm,
GulfofAdenregionin2008isasmallnumber.Nonetheless,therehasbeenasharp
Allianz Global Corporate Specialty offeringmorepotentialtargets,evenaspiratescontinuetoadaptnewtechnologiesto
riseinpiracyintheSomaliacoast/GulfofAdenregionsincethesummerof2008.
Global Marine Head improvetheirowncapabilities.AllianzGlobalCorporateSpecialty,theindustrial
Attemptedattackstherejumpedfrom55in2007to132in2008,andtherewere61
andspecialtyinsurancearmoftheAllianzGroup,isoneoftheleadingprovidersof
successfulattacksinthefirstquarterof2009.
marineandtransportinsurance,engagingclientsintheshippingindustryina
Observerscannotsaywhetherthisisapeakriseorpartofageneraltrend.Piracy
dialogueabouttheirrisks,includingpiracy.ThatiswhyIampleasedtosharewith
arisesfromthesamebasicingredients:poverty,alargeareaofseadifficulttopatrol
youthisstudyonpiracyinordertosupportthatdialogue,andIwelcomeyour
andatraderouteofferingasteadyflowoftargetships.Somaliaisstableonlyinsome
feedbackonthistimelytopic.
placesandiselsewhereruledorfoughtoverbyclans,militias,religiousgroupsanda
varietyofotherorganizations.Asaresult,itissufferingfromnearly20yearsofviolent
civilwarwhichhasplacedweaponsinthehandsofmanydesperatepeoplewho
mostlyliveonlessthan$2aday.Otherregionswithsimilarproblemsarealsoatrisk.
June,2009
Whenattacksdooccur,theyleadtosignificantlossesandnegativepublicityfor
shippingcompanies.Becausepiratesworkalmostexclusivelyininternationalwaters,
Contents normalcriminal prosecutionishighlycomplex.Armedresistancewillusually
escalatetheviolenceandoftenmeansmorelegalproblemsfortheownersoftheship
underattackthanfortheattackers.
02 Foreword
Forinsurers,allthismeansbothmoreintensivedialogueswithclientsabouthow
03 Introduction theymitigatethisriskandinsurancesolutionsthatdealwiththedistinctrisksof
04 The new faces of piracy piracy.Beyondthat,itisintheinterestofgovernments,business,insurersand,of
Whilepiracyhasincreasedinsomeregions,itisdecliningelsewhere.The course,thepeoplenavigatingtheworld’soceanstoworktogethertohandlethis
recentjumpintheSomaliacoast/GulfofAdenarearepresentsaseriousconcern. challengeinordertoreducethethreatofpiracyonthehighseaandtobringorderto
08 Working for risk solutions internationalwaters.
Piracyrepresentsaspecificriskforshipstransitingcertainregions. Piracy: An ancient risk with modern faces examinescriticalareasofthisthreat,
Insurancesolutionsareneededthattacklethisspecialchallenge. includingtrends,insuranceissues,attackmethodsandriskmitigation.Nostudyon
thesubjectcanbeexhaustivebecauseitishighlycomplexandthesituationis
10 From Hull to War insurance
changingallthetime.Thispaperthereforeprovidesanoutline,essentialfactsand
Allianzisremovingpiracyriskfromgeneralhullandmachinerypoliciesand
figuresandinsightsfromAllianzin-houseexpertsalongwithkeysourcesforfurther
placeitwhereitbestfits–withwarinsurancepolicies
information.Journalistsandclientswhowouldlikemorein-depthviewsandcurrent
12 Modern attacks dataareinvitedtocontactusandspeakwithourexperts.
Alongwiththeshiftinthelocationofpiracyhascomeachangeintheir
methodsandtargets.Somalipiratesarewellarmedandhighlymotivated.
16 Mitigating piracy risks
Shipsarereviewingtheirtacticsforavoidingorfendingoffpirateattacks.
Therearenewmethodsaswellassomeverybasicmeasurestheycanemploy.
18 Conclusion
19 References / for further reading
2 3

3. The New Faces of Piracy Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces The New Faces of Piracy
oneineverysixvesselsattackedwas TheMalaccaStraits–amajor
successfullyhijacked.Thisratedecreased strategictraderouteandanother
tooneineightforFebruary2009and formerpiracyhotspot–hasreported
onein13forthemonthofMarch.On onlyoneincidentthisquarter.Thedrop
average,oneineightattacksinthefirst inattacksisduetoincreasedvigilance
quarterwassuccessful. andpatrollingbythesurrounding
TheeastcoastofSomaliarecorded20 countriesIndonesia,Malaysiaand
attacksinthefirstquarterof2009,with Singaporeandthecontinued
18oftheincidentsreportedinMarch precautionarymeasuresonboardships.
alone−includingfourhijackings.This Thesituationhasalsoimprovedin
comparestothelastquarterof2008in Bangladesh(Chittagong)andTanzania
whichsevenincidentswerereportedin (DaresSalaam),withaslightdecrease
thisarea,includingtwohijackings. inthenumberofincidentsreportedin
Mostpiratesareaged20–35yearsold thefirstquarterascomparedtothe
andcomefromtheregionofPuntland,a correspondingperiodlastyear.Inthefirst
regioninnortheasternSomalia.The threemonthsof2009onlyoneincident
EastAfricanSeafarers'Association wasreportedforBangladeshcompared Ralf Zibell, Senior Risk Consultant Marine.
estimatesthatthereareatleastfive tothreeduringthesameperiodlast Zibell was involved with piracy issues
pirategangsandatotalof1,000armed year.VesselscallingatTanzania while sailing on liner vessels for nearly
The New Faces of Piracy men.AccordingtoaBBCreport,pirate reportedtwoincidentsascomparedto two decades. Recently he has supported a
gangsgenerallyconsistoflocal fourduringthesameperiodlastyear. recovery mission in the Straits of Malacca.
fishermen,ex-militiamenandtechnical Piracyriskhasclearlymovedfrom
expertswhooperatehigh-tech eastandsoutheastAsiatoSomaliaand
equipmentsuchasGPSdevices. theGulfofAden.Zibellfeelsthatwhat Key statistics
wassuccessfulinIndonesiaandthe n 102 attacks were reported in the
Today's major focus is on Somali pirates like these who took Yemeni fishermen hostage in April this year. Growth and decline in other regions MalaccanStraitscannotbeeasily first quarter of 2009, compared
Photo: Associated Press PiracyriskisnotjustconfinedtotheGulf replicatedinthisdestabilizedregion: to 53 in 2008
A dramatic increase in attacks by Somali pirates has led to a near doubling ofAdenandSomalia.Nigeriacontinues “Suchco-operationdoesnotappearto
n Somalia and the Gulf of Aden
tobeahighriskarea.Inthefirstquarter beanoptionintheGulfofAdenand
in the number of ships attacked during the first quarter of this year of2009theIMBreceivedreportsofonly Somalia.AsSomaliaisvirtuallylawless
accounted for 61 of the total – up
from 6 in 2008
compared with the same period in 2008. This shift has drawn attention sevenincidents,althoughunconfirmed andwithoutaneffectivegovernment,
reportswouldsuggestthatatleasta therearenoagenciestherethatare n In the first 3 months of 2009, 34
away from other regions that are either known to represent a pirate threat vessels were boarded, 29 vessels
further13attackshadoccurredinthe preparedtopoliceagainstpirate
or at risk of increased activity. Some areas have also been able to report sameperiod.Nearlyallincidentshave attacks.Asaresult,wecanonlyforesee fired upon, and nine vessels
hijacked
success stories, in which pirate attacks have declined significantly. takenplaceonvesselssupportingand aworseningsituationinthearea.”
connectedtotheoilindustry.TheIMBis n In the first quarter of 2009 a total
urgingvesselstoreportanyattacksso of 178 crew members were taken
thattheNigerianauthoritiescanbetter hostage, nine were injured, five
Piracyworldwideiscontinually majorityofincidents,theattackerswere underreportingmaybeacauseofmore kidnapped, and two were killed
prioritizeandresourcetheirlaw
monitoredbyinternationalbodiessuch heavilyarmedwithgunsorknives.In concern:attemptedpirateattacksgo
enforcementagenciestorespond. n Indonesia, which held the record
asthePiracyReportingCenter(PRC)at addition,violenceagainstcrew unnoticed,”heexplains.“Anyboatthat
Peruhasalsoseenanincreasedlevelof for the highest number of piracy
theInternationalMaritimeBureau memberscontinuedtoincrease. speedsuponapproachorthatcircles
incidentsinitswaters,withseven attacks between 2003 and 2007,
(IMB).Accordingtoareportissuedby RalfZibell,marineriskconsultantat theship,forexample,shouldbe
attacksreportedtothePRC,allofthem saw only one incident reported
theIMBtherewasatotalof102 AllianzGlobalCorporateSpecialty, reportedtotheauthorities.”
successful.Thelastquarterof2008saw in the first quarter of 2009
incidentsreportedtothePRCinthefirst saysthat“under-reportingfromvessels
onlyfourincidentsreported.
threemonthsof2009,comparedto53 involvedinattempted–oractual– The latest threat: Somalia
However,somecountrieshavemade Piracy Activity 2003-2008
incidentsinthefirstquarterof2008. piracyincidentsisstillagreatconcern. Thisgrowthinthefirstquarterof2009is
greatstridesinreducingpiracyrisk.
Thequarterlyreportalsosaidattacks Manyvesselsdismisstheideathat duealmostentirelytoincreasedSomali 500
Attempted and successful attacks
Indonesia,whichheldtherecordforthe Somalia/Gulf of Aden
increasedbyalmost20%overthesame pirateshavefollowedthemortriedto pirateactivityofftheeastcoastofSomalia World
highestnumberofpiracyattacks 400
periodlastyear. engageasjustboatsthathavecometoo andespeciallyaroundtheGulfofAden.
between2003and2007,sawonlyone
Worldwideatotalof34vesselswere closetothem.” Thetwoareastogetheraccountedfor61 300
incidentreportedinthefirstquarterof
boarded,29vesselsfiredupon,andnine Zibellisamastermarinerwithmany attacks,comparedtojustsixincidents 200
2009,comparedtofiveincidentsinthe
vesselshijackedthroughMarchof2009. yearsofexperienceatseahimselfand forthesameperiodin2008.
correspondingperiodin2008and21in 100
Atotalof178crewmembersweretaken hasactuallybeeninvolvedinfendingoff Forty-oneincidentswerereportedin
thefirstthreemonthsof2004.
hostage,ninewereinjured,five piratesaswellasrecoveringstolen theGulfofAdenregion,includingthe 0
2003 2004 2005 2006 2007 2008
kidnapped,andtwokilled.Inthe freight.“Therealreasonfor hijackingoffivevessels.InJanuary2009, Year
4 5

4. Piracy Hotspots Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Piracy Hotspots
Nigeria: Over the last couple of years the Bangladesh: Number of attacks currently
number of attacks around Nigerian ports has falling. Particular focus of pirates is on
increased, especially in the Lagos and the ships anchoring in Chittagong area.
Bonny River regions.
Philippines: The Philippine archipelago
Peru: While the number of attacks off the has a very long history of piracy. Lately,
coast of Peru remains fairly low at seven in rates have remained constant at six to
2008, it represents a significant increase, and seven reported attacks a year.
the trend is being monitored.
Indonesia: Attack levels stable and fairly
Brazil: There is a regular but low rate of low lately. Due to vast expanse of water
attacks around Santos, and ships’ crews are covered by the country and variety of
on alert in the region. ships, many attacks may go unreported,
so ships are advised to stay alert.
Tanzania: The trend for Somalia/Gulf of Aden: The Horn of Africa has seen major Malacca Straits: A few years ago, this
pirate activity has remained growth in piracy. Somali pirates are well armed and focus was the chief hotspot worldwide.
constant at about a dozen a on ransom of the vessel and the crew. Attacks are taking International patrols since 2005 have
year in waters close to the place farther and farther from the coast, indicating that brought down piracy considerably. The
capital Dar es Salaam. pirate skiffs are now launching from larger “mother ships”. region is nonetheless still “at-risk”.
Global Piracy Hotspots
Worldwide, piracy remains rare. Rates
rise and fall in specific areas due to Hotspots:
local conditions such as poverty levels, Attempted and actual attacks 2003-2007 vs. 2008
government stability and proximity to 100
major shipping lanes. 80
Average 2003 - 2007
2008
60
40
20
0
Gulf of Aden Nigeria Indonesia Somalia Tanzania Bangladesh Vietnam Malaysia India Phillippines Ghana
6 7

5. Working for Risk Solutions Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Working for Risk Solutions
beingtransported.Thoseshippinglines piracyisbeingtransferredfromthehull
thatcontinuetotraversetheGulfof tothewarpolicy.Discussionsarealso
Adenwillprobablyseeahikein goingonabouttheadaptationof
premiums. kidnapandransominsurancetothis
“WeatAllianzareheretoprovidea modernsituation.Ultimately,ifarisk
servicetoourclientsbutatasensible exists,itneedstoappearinthepricing
premiumforareasonablerisk,”says orwordingofinsurance.Justcallinga
McCarthy.“Thisiswhywewillcontinue riskraredoesnotmeanitwillnot
towatchpiracydevelopmentscarefully, happen.Forthisreason,heightened
particularlyintheGulfofAdenand awarenessoftheproblemneedstobe
Somalicoastregion.” coupledwiththerightrisksolutions.
Wanted: more flexibility
Before1983,piracygenerallywas
coveredunderwarriskpoliciesand
excludedfromhullpoliciesbutsince
then,ithasgenerallymovedbackinto Daniel McCarthy, Marine Hull
hullcoverage.IntheLondonmarket, Underwriter. McCarthy is a member of
optionalclausesbegantoappearthat the Lloyd’s Market Association Joint War
Working for Risk Solutions excludedpiracyfromhullpoliciesand Committee and is currently occupied with
wereintendedtotransfertheperilback core insurance issues surrounding piracy.
towarrisk.However,mostunderwriters
didnotadopttheoptionalclause,
largelyleavingpiracytoremainunder
hullpolicies.MarineinsurersatAllianz
Basics of ship insurance
Shipping companies and insurers both want smooth sailing nowwantthattochange.Theywantto When it comes to insuring an ocean-going ship, there are a number of different
seepiracyriskmovedintowar coverages available. In general, the different aspects of a ship, its crew and its
In the language of insurance, piracy is a “peak” risk. This means insurancepolicies(seep.10FromHull activities would be covered by the following types of insurance:
toWarinsurance).
that, while its probability is very low, potential losses are relatively Dr.SvenGerhard,globalheadofhull n hull to cover the physical damage of the ship
high. It is also not equally spread around all over the world, but insuranceatAllianzGlobalCorporate
n third party liability
Specialty,saysthat“hullandmachinery
rather concentrated around specific regions, and the methods and n protection and indemnity (PI) to cover the crew etc. - this is traditionally
policiesarenotflexibleenoughtodeal
targets of the pirates vary as well. This makes it difficult to include withpiracyriskanditshouldtherefore provided by specialized PI Clubs as well as specialist insurers such as Allianz
piracy risk as part of a general insurance policy, so it is important to bemovedtowarinsurancepolicies.” n loss of hire (comparable to business interruption insurance) to cover any
Thetransitiontowarriskcoverageof
find new ways of dealing with this unique challenge. earning losses which might occur as the result of a shipping accident with
piracyriskscouldbehelpfulforinsurers subsequent delays etc.
andpolicyholdersalikebecauseit
wouldclarifyambiguityabouthow Finally, ship owners can purchase separate war cover which is in many cases bought
piracyiscovered. specifically to cover piracy attacks.
Currently,shippersthatdonothave
Lastyearpirateshijacked49ships,took 2007andinthefirstquarterof2009the shippinginsurancebasics).Premium
separatekidnapandransominsurance Due to the high risks and large sums of money involved, ocean-going ships are
889crewmembershostageandfiredon areaaccountedfor61outof102attacks. increasesareonlyonepossiblereaction
mayhavepiracyransomcoveredby usually insured on a subscription (or coinsurance) basis. This means that the risk is
another46vessels,accordingtothe DanielMcCarthy,marinehull topiracy,buteachinsurerwill
“generalaverages”,avoluntary spread over a number of different insurers: each insurer only writes a certain
InternationalMaritimeBureau's(IMB) underwriteratAllianzGlobalCorporate approachthisissuedifferently.Allianz
agreementbytheowner,charterers, percentage – or a line – of the total risk, thereby limiting the exposure for the
PiracyReportingCenter,with111 SpecialtyisamemberoftheLloyd's takesabroadviewthatencompasses
insurersandotherintereststopaya individual companies.
incidentstakingplaceintheGulfof MarketAssociationJointWar clientdialogueaboutriskand
proportionateshareofavessel's
AdenoffthecoastofSomalia. CommitteeinLondon.TheJointWar integratedrisksolutionsratherthan
expenses.However,generalaverageis Another layer of complexity is added when the ship carries cargo. The cargo itself is
Furthermore,thetypesofattacks CommitteeconsistsofLondon-based generalratechanges.
verydifficulttoapplyandisnot not insured by the ship owner, but by the owners of the cargo – which in the case of
havechanged,withpirates–more insuranceunderwriterswhomeetevery Someshippinglineshavealready
specificallydesignedtoaddressransom a big ocean-going cargo carrier can be quite a large number of parties with a variety
heavilyarmedthaninpreviousyears– quartertoexchangeinformationonwar startedtoavoidtheGulfofAdenand
threats. of different insurers. Therefore maritime law has introduced the principle of general
attackinglargershipsandgoingfarther risk,focusingatthemomentespecially haveoptedtogoaroundtheCapeof
Inordertohandleanygapsin average which is particularly relevant for emergency situations when part of the
outtosea.Theirfocusisalsomoreon onpiracy.McCarthysaysthatthe GoodHope,whichaddsaroundthree
coveragethismayleadto,intheLondon ship or the cargo have to be sacrificed to save the whole. In that case and subject to
ransomthanongoods,unlikeother growingriskofpiracyislikelyto weekstoeast-westtransittimes.The
marketwhichunderwritesmostmarine the contract terms, all parties jointly share in the common loss incurred.
regions.Thenumberofincidentsin increaseinsurancepremiums,aswell effectisthatoperatingcostsareraised
riskpolicies–inabout80%ofcases,
2008representsan11%increaseover asthecostofshipping(seeboxon andultimatelythepriceofthegoods
8 9

6. From Hull to War insurance Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces From Hull to War insurance
John R. Barnwell, Global Ocean Cargo
Product Leader. Located in New York, he
has had over 18 years experience in
From Hull to War insurance
marine insurance.
War insurance covers various forms of armed conflicts,
including not only piracy but also rebellions and insurrections.
Dr. Sven Gerhard, global head of hull insurance at Allianz
Global Corporate Specialty, believes that it is now time to
remove piracy risk from general hull and machinery policies
and place it where it best fits – with war insurance policies.
Dependingonneeds,“war”riskscan andthelevelofrisk–aswellaslevelof underwriting–cannotarrangemore commentsDr.Gerhard.“Japan,Sweden carryingandsomakenoattemptto
includenotonlylossesduetoarmed coverage–canbemoreflexibly flexible,individuallysuitedpiracy andNorwaydothis,anditistimethat stealit.Theyjustwanttomakeaquick,
conflictsbetweencountriesbutalso underwritten,andthereforemore coveragebecauseitispartoftheir therestofusfollowedsuit.” high-valuetransaction.Asaresult,the Dr. Sven Gerhard, Global Hull Liabilities
duetootherviolentsituationssuchas flexiblypriced. generalhullandmachinerypolicies, JohnBarnwell,oceancargoglobal majorityofcargoisunaffected,unlessit Product Leader. Dr. Gerhard is currently
insurrectionsandpiracy.Warinsurance Warriskpoliciestypicallyarepaid whichhavefixedtermsandprices.As productleaderatAllianzGlobalCorporate isperishablegoods,”heexplains. co-writing a book on transport insurance
doesnotcovermilitaryforces,their pertransit,andunderwritersoften thenatureofpiracyriskischanging, Specialty,predictsthatwiththe law and holds several honorary positions
machineryoractivities.Insteaditis chargeadditionalpremiumfortrips insurancepoliciescoveringtheserisks increasingnumbersofattacksonshipsin in various German marine institutions.
usuallywrittenforciviliantransport throughhigh-riskareas.TheGulfof alsoneedtochange.” areasliketheGulfofAden,manyinsurers
industriessuchasshippingand AdenhasbeenontheLloyd’sMarket aregoingtoberevisitingtheirinsurance
aviation,inwhichitmaybenecessary AssociationJointWarCommittee's Cutting out the ambiguity coverconcepts.Asaresult,hesays,
totransitthroughat-riskzones. high-risklistsinceMay2008. Dr.Gerhardalsosaysthatclaimsarising brokers,clientsandinsurerswillhaveto
Dr.Gerhardsaysthatthereare “Therearealotofshipping frompiracyattackswouldbeeasierto workcloselytomakesurethattheyhave
severalproblemswithincludingpiracy companiesouttherethatarepayingfor settleifpiracyriskwasconfinedtojust therightcoverfortheirincreased
riskingeneralhullandmachinery piracycoverthatdonotneeditaspart onepolicy–warinsurance. exposures.
policies.Firstly,hepointsoutthathull oftheirhullandmachinerypolicies,Dr. “Havingpiracyriskconfinedtoone Barnwelladdsthatcargoclaims
andmachinerypolicieschargeafixed Gerhardexplains.Conversely,thereare policyinsteadoftwocutsoutalotofthe shouldnotbelargelyaffectedbytherise
priceyearonyear,irrespectiveofa alotofvesselsthatareexposedtohigh ambiguityanduncertaintythat ofpiracyincidents.“Inthemajorityof
vessel’sriskofsufferingapirateattack. levelsofpiracyriskbecauseofthe customersandinsurershaveregarding incidences,piratesarenotinterestedin
Warpolicies,however,aremoreflexible, routestheytravelthat–undercurrent thescaleofanyliabilityonaclaim,” theactualcargothattheseboatsare
10 11

7. Pirate Attacks Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Pirate Attacks
clientsduringpiratesituations.“In encompassesoveraquarterofthe
Somalia,piracyhasbecomeanindustry, IndianOcean,whichmeansthatitis
andalargenumberofpeoplemakea impossibletopolice.
livingfromit,“hesays.“Thepiratesare Thealternativeroutetousingthe
knowntoreceivetip-offsfromcontacts Gulf—steamingaroundthesouthern
atportsintheGulfofAden.Theyuse tipofAfrica—wouldaddaround2-3
speedboatswithverypowerfuloutboard weekstothejourneytime,andwould
motorstoapproachtheirtarget,and hiketransportationcosts.
sometimesthesearelaunchedfrom Inmid-December2008,theUN
muchlarger‘motherships’onthehigh SecurityCouncilapprovedaresolution
seas.Naviescanprovidegreater allowingcountriestopursueSomali
protection,buttheareaistoolargeto piratesonlandaswellasatsea–an
monitorconstantlywithoutthehelpof extensionofthepowerscountries
localenforcementagencies,andthey alreadyhavetoenterSomaliwatersto
arelargelyineffective.” chasepirates.ButaslongasSomalia
DanielMcCarthy,marinehull continuestoexistwithoutaneffective
underwriteratAllianzGlobalCorporate government,manybelievelawlessness Paul Newton, London Head of Hull and
Specialty,hasbeencarefullyobserving withinthecountryandoffitslengthy Yacht Underwriting. Newton has 21 years
thesetrends.He notesthatpirates have coastwillonlygrow. of experience in marine insurance and
Pirate Attacks alsobecomemoresophisticated.“They Piracyisconsideredtobeoneofthe has been involved with recent piracy
regularlyattackcommercialvessels oldestkindsofcrimesagainst events within the Allianz Group.
usingthelatesthi-techequipmentsuch
assatellitephonesandGPS,”heexplains.
“Theyarealsoheavilyarmedwith
rocket-propelledgrenadesandAK-47s.” Somalia/Gulf of Aden in Focus
A ship off the east African coast in April followed by an unidentified small boat thought to belong to pirates - fortunately without attacking “It’sdifficulttocontrolthesegroups
Photo: Associated Press asSomaliacontinuestoexistwithout n Per capita income in Somalia (2008): $600. Total GDP 2008: $5.575 billion.
While the number of piracy attacks is increasing, particularly around aneffectivegovernment,”McCarthy n According to the World Bank, as much as 73% of the Somali population lives on a
continues.“We’realsotalkingabouta daily income below $2.
the Gulf of Aden and the waters off the Somalian coast, the types of vastamountofwatertopatrol–more n Approximately 11 percent of the world's seaborne petroleum passes through the
attack are also changing. The latest reports show that the pirates are thanmostpeoplerealise.Thehighest Gulf of Aden on its way to the Suez Canal or to regional refineries.
profilevesselwascaptured450nmoff
more likely to carry automatic weapons and grenades as well as knives n Largest ship captured to date: 332m length, carrying its full complement of two
thecoastofKenya.” million barrels of crude oil worth at least $154million, hijacked 450 nautical miles
and machetes, and that crews are more likely to be held hostage. McCarthysaysthat“ifclientshaveto southeast of Mombasa, Kenya.
Furthermore, all boats are liable to attack – from yachts to tankers – navigatethearea,wediscusswhat n Around 20,000 oil tankers, freighters and merchant vessels pass along the crucial
meansofprotectiontheycanemployin
but bulk carriers are the most common targets. Research also shows shipping route each year.
additiontousingthecoalition-patrolled n An estimated $25 million to $30 million was paid in ransom to Somali pirates in 2008.
that, pirates are largely uninterested in the ship’s cargo – holding the channel.Theyneedtoplantheirroute n Many of the captured ships sit a few miles off a 230-mile stretch of Somali coastline
vessel for ransom is enough for them. inadvanceandcontactnavalunitsand between Xarardheere and the town of Eyl in the semi-autonomous Puntland region.
othervesselswhenenteringthearea. n Area patrolled by international naval fleets: over 2.5 million nautical square miles of
Othermeasuresincludeemploying sea (6.5 million sq km). There are now 25 warships from the European Union,
securityofficersonboardandhavinga China, the United States
Therewardspiratesreceivearerichina increasinglypreparedtotargetshipsup Pirate hubs and networks 24-hourstandingwatch.” and Japan patrolling this Gulf of Oman
countrywheretherearenojobsand to600nauticalmilesfromthecountry’s Afterboardingthevessel,thepirates vast area, roughly one SAUDI ARABIA
almosthalfthepopulationneedsfood coastline,eveninskiffs,whichsuggests thensailthehijackedshiptoaSomali International response ship for every 100,000 OMAN
aidafter17yearsofnon-stopconflict.It thattheyarelaunchingoffshorefrom piratehubtown,likeEyl.Oncethere, Inresponsetotheincreasedfrequency square miles. Red Sea
SUDAN
isestimatedthatpirateshavereceived “motherships”.Mostoftheseskiffsare piratesusuallytakethehostagesashore ofpirateattacks,severalnations—
US$150minthepastyearinransom verysmall,whichmakesthemdifficult wheretheyarenormallywell-looked includingtheUnitedStates,theUnited ERITREA YEMEN Arabian Sea
payments,andthattheyusesomeof todetectbyradar,andarealsodifficult afteruntilaransomispaid. Kingdom,otherEuropeanUnion
thismoneytofundfutureoperations– todistinguishbysight–especiallywith PaulNewton,headofUKhulland memberstatesandothercountries— Gulf of Aden
PUNTLAND
morepowerfulweapons,biggerand thesunreflectingoffthesurfaceofthe yachtunderwritingforAllianzGlobal haveincreasedtheirnavalpresencein ETHIOPIA
SOMALIA
Indian Ocean
fasterboats,andmoresophisticated water–becausetheyareeitherblueor CorporateSpecialty,saysthatitisa theGulfofAden,whichvesselsmust Sources: The International Tanker
equipment. whiteincolor.Also,mostoftheattacks mistaketounderestimatehow traversetogettotheSuezCanal.Butthe Owner Pollution Federation Limited
Informationreleasedbythe takeplaceatnight. organizedthesepiratesare.Newtonhas logisticsareagainsteffectivenaval (ITOPF), Agence France-Presse (AFP),
InternationalMaritimeBureau(IMB) beendirectlyinvolvedinsupporting intervention.Thetargetedareanow CNN, New York Times, Reuters
alsosuggeststhatSomalipiratesare
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8. Pirate Attacks Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Pirate Attacks
humanity,aviolationoftheverynotion Violent intervention handexperienceinthearea.
oforganizedsociety,andpiratesare TheUnitedStates,whilethreatening Circumstancesaresosensitivethat,for
universallysubjecttoarrestand pirateswithcriminalprosecution,has example,younevernegotiatewith
prosecution.Thatisintheory.Thefact alsostartedtomeettheproblemwith piratesdirectly.Instead,weturnto
isthatthereisnoagreedinternational force.Whenonelargecargoshipwas specialistcontractors,peoplewhoknow
legalsystemforarrestinganddetaining capturedinAprilandtheship’scaptain thepiratesandarefamiliarwith
peopleaccusedofpiracy,noteven washeldforransom,USNavySEALs conflictscenarios.
amongalliedcountriessuchasthe intervenedandshotdeadthreepirates. “Ifpiratesfeelthattheymaybe
NATOstates.Countriescanonly However,thiskindofintervention killed,addsDierks,thewholescenario
prosecutepiratesarrestedintheirown mayescalatethelevelsofviolence couldbecomealotmoredangerousfor
jurisdictions.Ontopofthat,thereare alreadyseeninrecentpiracyattacksin crewsandcouldcreatemuchlarger
veryfewmodernpiracylawsinplace. thearea,andcouldalsoleadtomore exposuresforinsurers”.
Someoftoday'sindustrializedcountries politically-motivatedattacks.Volker Dierksalsobelievesthatbigheadline
findthemselvesreferringtolaws Dierks,Germanyheadofhull caseslikethecargoshipinAprilraise
writteninthedaysofBlackbeard. underwritingatAllianzGlobal theissueofshippingcompaniesbuying
Afewcountrieshavetriedtotake CorporateSpecialtysaysthat“priorto kidnapandransominsurancefortheir
Volker Dierks, Head of Hull Underwriting mattersintotheirownhands,putting thisincident,mostpirateattackshad captainsandcrews:“Lastyearthere Frédéric Denefle, Head of Marine Claims
in Germany and a master mariner. Dierks piratesontrial,suchasinKenyaand beenrelativelypeaceful,eventhough were42casesofkidnapandransom. France. A well known figure in his market,
has 27 years of experience in marine and France.Ontheotherhand,theBritish thepirateswerearmed.Crewswere Thismeansthatthefrequencyofsuch Denefle has had to work together with
recently has been involved in piracy cases ForeignOfficehasadviseditsnavynot heldhostagebutwerenotharmed,and attackshavebeenrelativelyrare. clients negotiating with pirates.
off the coast of Somalia and Nigeria as an tocapturepiratesfromcertain thepiratessimplywaitedfortheir However,thatcouldnowchangeif
underwriter. countries,becausetheymayevenbe ransomdemandtobepaid.” piratesfearthattheycouldbecounter-
abletoclaimasyluminBritainas Hostagesituationsareveryintense, attackedwithweaponsorarmed
“refugees”fromwarzones. explainsFrédéricDenefle,Francehead forces.”
ofMarineClaims.Deneflehashadfirst-
Typical pirate skiff vs. average bulk carrier
travelling round the Horn of Africa
Typical bulk carrier - 160m
0m 10m 20m 30m 40m 50m 60m 70m 80m 90m 100m 110m 120m 130m 140m 150m 160m
Typical pirate boat - 8.5m
Pirate skiffs are extremely small compared
to their prizes. For this reason, pirates Naval ships from various countries now patrol the
checking a vessel for attack often go Gulf of Aden, but until now their effectiveness has
unnoticed or are mistaken for fishermen. been limited to a small area.
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9. Risk Mitigation Piracy: An ancient risk with modern faces Piracy: An ancient risk with modern faces Risk Mitigation
Defensive measures “Weaponswillonlyescalatethe
Butforthoseshipsthatmustgothrough problem,”saysZibell.“Althoughthe
Additional lookouts / Razor wire or
bridge manning electric fence suchdangerousroutes,therearea piratesarearmed,attacksaregenerally
Satellite tracking
(including dummies) numberofstepstheymustbeableto notviolent,butthatsituationwould
takeincaseofanattack.Thiscaneven certainlychangeiftheywerecounter-
meanholdingpiratesatbayforacritical attackedwithweapons.Furthermore,
fewminutesuntilmilitaryhelparrives. insurerswouldbeverywaryofinsuring
Long-range acoustic device Thesestepsaregeneralrecommendations, anyvesselthatcarriedarmsorarmed
whileindividualmeasuresdependon guardsonboard.Apotentialliability
thesituationandspecificneedsofthe claimforshootingapirate–orcausinga
System of nets shipandcrew.Firstly,theship'screw crewmember’sdeath–couldbevery
CCTV / camera systems shouldbeprepared tospeeduptoevade costly,ascouldtheresultingdamageto
High speed through at-risk areas attackersandusewaterhosestorepel thehull.”
piratesattemptingtoscaletheirhulls. Therefore,Allianzworkswithclients
Shipsshouldalsodoubletheirnight- anddiscussboththeirawarenessand
Pressurised fire hose
timewatch. theirpreparedness.“Iftheyhaveto
Slippery Foam Therearealsoanumberof navigatethearea,wediscusswhat Captain Allan Breese, US-based Marine
technologiesavailabletohinderpirate meansofprotectiontheycanemploy,” Loss Control Consultant. Captain Breese
Boarding ladders stowed up on deck, not extended to ocean surface developed anti-piracy measures for his
attacks.Forexample,someshipshave saysseniormarineunderwriterDanny
Risk Mitigation deployedanoisemachinecalledalong- McCarthy. container ship as it transited the Straits of
rangeacousticdevice,whichshootsa Inaddition,ofcourse,youdiscuss Malacca for more than eight years. He has
painfulwallofsoundatitstarget.Others theirinsurancesolutions,explains been working in ship and port security
useelectricfencesandbarbedwireto FrenchmarineclaimsheadFrédéric around the world for seven years and in
makeitmoredifficultforpiratestotryto Denefle.Youneedtheright the insurance industry for four years.
board.Therearealsosatellitetracking combinationofcoverage,including
devices,suchasShipLOC,thatcanhelp consideringwarandkidnapransom
pinpointaboat’spositionifradio cover.Atthesametime,thisinformation
Pirates are opportunists. They attack ships they come across that happen to contactiscut.However,puttingfirearms needstobekeptveryconfidentialinthe
aboardaship,eveninthehandsof samewayyoudon'tannouncetopirates
fit the right profile. For this reason, it is especially important for shippers to trainedprofessionalsecurityservices,is whatkindoftreasureashipiscarrying.
be aware of what kind of prize pirates in specific regions are after. To match usuallyasteptoofar.
pirates’ tactics, boat crews need to be properly trained to employ certain
defenses, although they are strongly cautioned not to use weapons.
Inresponsetothegrowingnumberof CaptainAllanBreese,seniormarineloss tipofAfrica,whichcantakeuptothree
piracyattacksoffthecoastofSomalia, controlconsultantatAllianzGlobal extraweeksandaddassociatedcosts.
inFebruarythisyeartheInternational CorporateSpecialtywithmanyyears RalfZibell,marineriskconsultantat
ChamberofCommerce(ICC) experienceatseaaswell,saysthat AllianzGlobalCorporateSpecialty,
CommercialCrimeServices’unitissued “thereareplentyofsmallstepsthat frequentlyadvisesclientsaboutanti-
itsguidancecalledBestManagement shipscantaketomakethemselvesless piracymeasures.Hesaysthatfrequent
PracticestoDeterPiracyintheGulfof accessibletopirates,andallvessels communicationaboutpirateattacksin
AdenandofftheCoastofSomalia.Its shouldconsiderusingsomeofthem. theirareasisalsovital.“Oneofthekey
analysisofsuccessfulattacksindicates Themajorityofpirateattacksare faultsthatcompaniesmakeisthat
thattherearefivecommon opportunistic,sothebetterprepared althoughtheymaybekeepingacheck
vulnerabilitiesthatareexploitedby theship,captainandcrewaretodeal forreportsofpirateattacksintheareas
pirates: withpiracyrisk,themorelikelytheywill wheretheirvesselsaresailing,they
betoovercometheproblem.” oftenforgettopassontheinformation
1:Lowspeed Asaresult,themostbasicrisk totheircaptains.Itissuchasimple
2:Lowfreeboard managementtacticthatshipperscan oversight–butitcanbeaverycostly
3:Inadequateplanningandprocedures useisavoidingpiracyhotspots.Inthe one.” Information sources such as the
4:Visiblylowstateofalertand/or caseofshipsheadingthroughtheGulf International Marine Bureau and the
evidentselfprotectivemeasures ofAdentotheSuezCanalandEurope, Lloyd’s Market Association provide one of
5:Whereaslowresponsebytheshipis thatmeanssailingaroundthesouthern the most important lines of defense.
evident
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