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Shippers use armed guards, navy protection to curb marine piracy incidents

Shippers use armed guards, navy protection to curb marine piracy incidents

The use of armed guards aboard ships and protection from international naval forces off the coast of Somalia has contributed to a notable reduction in marine piracy in the past couple of years, causing prices for marine war and kidnap and ransom policies to fall precipitously for shipping companies.

There were 138 piracy incidents in the first half of 2013, compared with 177 incidents during the same period in 2012, according to the London-based International Maritime Bureau. There were 127 shipping crew members taken hostage by pirates in the first half of this year, compared with 334 in the first half of 2012.

As a result, pricing for policies that would cover marine piracy events has fallen 30% to 40% in the past 12 months, according to Ashley Hammond, London-based client director for Aon Risk Solutions' marine practice. The decrease has been as much as 60% for fleets with more than 100 transits per year.

Lars Gustafson, New York-based senior vice president in the marine practice group at Marsh Inc., said he has seen premiums for marine war risk, war protection and indemnity, and kidnap and ransom policies fall to about one-quarter of the price they reached at their peak in 2010 and 2011.

While the overall decline in piracy events is viewed as a success by marine experts, they caution that improved safety could cause companies and naval forces to become less vigilant, creating potential for a piracy rebound down the road.

“If (forces) pull back, it may encourage the pirates to get back to their activities,” IMB Director Pottengal Mukundan said. “If (pirates) succeed in taking a few ships, the incentive will be there for them to carry on. So it's very important that the navies remain for at least a couple of years until the piracy model is totally destroyed.”

Experts say several factors have contributed to a sharp decline in piracy off the coast of eastern Africa. First, the use of armed guards aboard tankers and cargo vessels has helped deter would-be pirates from boarding and hijacking ships. For instance, Aon's Ms. Hammond said 30% to 50% of shippers are using armed guards for transits near Somalia.

Naval forces from the United States, the European Union, China and other nations also have aided in the decline by collaborating to prevent attacks, Mr. Mukundan said. He said navies have been particularly helpful because, unlike private security firms, they have authority to collect intelligence on pirate vessels and confiscate weapons from pirates.


The establishment of a central government in Somalia also has helped to create some consequences for pirates in the past year, said Aleck Burrell, London-based maritime operations manager for NYA International Ltd., a consultancy that manages risks related to marine piracy, kidnapping, abduction and similar crimes. However, he said that the country still needs to achieve more political stability in order for the government to have a long-term effect on piracy prevention.

Many shipping companies also have adopted a set of best management practices for Somali-based piracy protection, BMP4, issued in 2011 by shipping industry and law enforcement groups. Tactics recommended in the guide include using night-vision optics to watch for pirates, placing dummies around a vessel to appear as though a ship has a high number of watchmen, and providing bullet-resistant jackets and helmets gear to certain crew members to protect them from pirate weapon fire.

Those best practices have given companies the tools needed to guard themselves from attacks, helping piracy to decline from its peak several years ago, Mr. Burrell said.

“In my opinion, we will never see 2009 levels of piracy again because the industry has developed,” Mr. Burrell said. “It's learned how to protect itself.”

These practices have made it more difficult for pirates to successfully take over ships and hold them for ransom, which has made Somali-based piracy less lucrative for criminals and reduced their interest in such crimes, Mr. Mukundan said.

“This is denting the piracy model for the people who are funding these piracy operations, because for them it's a business,” Mr. Mukundan said. “If they invest, they need to get a return, and right now they're struggling to get a return.”

Still, piracy continues to be a concern worldwide, and experts are keeping an eye on such crimes in the Gulf of Guinea off the coast of western Africa.

Steve Gillen, New York-based head of global marine claims and risk engineering for Zurich Insurance Group Ltd., said piracy in the Gulf of Guinea tends to focus on stealing cargo from ships, compared with Somali-based piracy that tends to aim for collecting a ransom for the crew members of hijacked ships. Western Africa attacks also tend to be more violent than piracy in eastern Africa, he said.


“While I don't believe that there are too many documented cases of murder, there has been some pretty significant rough handling of vessel crews,” Mr. Gillen said.

The IMB's Mr. Mukundan said many incidents in the Gulf of Guinea go unreported because shippers often travel to ports in the region and may fear retribution from pirates based in those countries. He said shippers also may have a sense that reporting won't stop such crimes from happening.

Experts say they're concerned that underreporting of piracy, as well as a sense of security from a reduction in such crimes, eventually could lead international forces to reduce their naval presence and cause shippers to let down their guard for potential piracy events.

“As people begin to relax and complacency sets in, then it ... is highly conceivable that a ship is taken in the near to mid-future,” Mr. Burrell said.

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