going west - seacurus ltdseacurus.com/newsletter/issue7.pdf · 2015-04-09 · going west image -...

Seacurus Limited,Design Works, William Street,Gateshead, Tyne & Wear,England, NE10 0JP

Tel: + 44 (0) 191 4690859Fax: + 44 (0) 191 4697940

Email: [email protected]

Insurance BulletinIssue 07 - August 2011

Going West

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In this issue we look at the statistics underpinning pirate activities, and we also look west, to the Gulf of Guinea where attacks are on the up.

The numbers paint a very clear and concerning picture. Ransoms are on the rise, bulk carriers get attacked the most and actually get hijacked the most too. Pirates prefer to target newer vessels, however when they do they have less success than when they target older ships. Size matters too, with handysize and small/coastal vessels far more likely to fall prey to the pirates.

Welcome

By Steven JonesRisk and Security AnalystSeacurus Ltd

It seems the “Somali disease” of piracy is increasingly being spread, and piracy is on the increase on the opposite coast of Africa.

Warnings are now being issued to ships travelling past Benin and in the Gulf of Guinea, following a spate of piracy attacks off the West African country. There have been an increasing number of attacks in the area, and vessels are now being hijacked and crews held.

According to the UK P&I Club, this new West African “piracy” trend is extremely worrying. Previous attacks off the West coast have usually involved petty theft and pilferage, while the higher profile, large scale attacks have been politically motivated.

Now it seems that there is a change, of both scale and ferocity with two tankers taken last month in quick succession.

Pirate groups have turned their attentions to the wholesale theft of oil cargoes from tankers.

In a string of attacks, gangs have boarded vessels, in order to transfer oil from the tanker into their own small tanker vessels. The operations have been known to take as long as four days and the vessels and crew are effectively hijacked for the duration of the theft.

There has been a geographic spread of the problem too. Pirate activity had previously been confined to port areas or the politically sensitive Bonny River and Niger Delta regions, now however the pirates are on the move. They are reaching further afield and even into foreign territories to capture vessels.

As tankers have moved further offshore away from the danger zone around Lagos to transfer cargoes, so too have the pirates. They have been known to operate along the coasts of Benin and Cotonou.

The pirates are believed to be Nigerian and the push outwards is believed to be a direct response to the successes of the Nigerian Navy in their own territorial sea.


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Stat AttackGetting reliable statistics regarding piracy attacks is notoriously difficult. There are too few reports, and then even they are received the actual contents can be “doctored” to varying degrees. Throw in various elements of self-interest and spin doctoring, and it can be seen that sometimes the numbers do not speak for themselves.

However, with that caveat it is important that we work with what we have, after all as they say, “what gets measured gets done”. By doing the sums properly we can hopefully manage risk effectively, whilst also putting in place effective and appropriate safeguards.

Rising Ransom TideAnalysis of the deals for ships hijacked from 1 Jan 08 to 30 Jun 11 make rather depressing, but perhaps predictable reading.

With a sample of seventy-eight vessels to plot, Compass Risk Management has produced a statistical analysis of ransom figures. The deals are as quoted in the media or other open source reports

However it should be noted that where no other credible source has been identified, then the Somali pirates own declarations have been used. This is a dangerous ploy, as there is an element of disinformation and bragging that has become commonplace from the pirates. After all, they have a vested interest in talking the figures up.

From 2008 when the average figure (in US$) was 1.3million, the trend has been moving inexorably upwards. Through the 3million mark in late 2009, continuing up to where the average now breaks the 5million mark.

There are also spikes, where payments have moved far from the average. In 2011 the trend for such high payments has worryingly become commonplace.

Soft TargetsWhat types of vessels are more (or less) prone both to attacks and eventual seajacks”?

According to research by Greenwich University, the six major vessel types which are most frequently targeted off Somalia are Bulk Carriers, Tankers, Container Vessels, General Cargo Vessels, Chemical Tankers and Fishing Trawlers.

Image - Reuters


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Based on this analysis, the commercial vessel type most frequently attacked off Somalia is the Bulk Carrier (27%), followed by the Tanker (18%), the Container Vessel (15%), the General Cargo Vessel (13%), the Chemical Tanker (11%) and last but not least the Fishing Trawler (3%).

Fishing vessels are usually targeted specifically to allow their capture by pirates, and for subsequent use as “Mother Ships”, thereby extending the geographical extent of the pirates operational capabilities and the fact they can stay offshore for longer and in all weather conditions.

When we look to the vessels actually hijacked, the vessel type most frequently affected is still the Bulk Carrier (25%), followed this time by the General Cargo Vessel (20%), the Chemical Tanker (15%), the Tanker (10%), the Fishing Trawler (8%) and the Container Vessel (6%).

This suggests that tankers and container vessels while more often targeted than general cargo vessels, they have a greater success rate at evading capture. No doubt due to the fact that most tankers and containers are newer, faster, higher and with better resourced crews.


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Size MattersWhile ship type is relevant, so too is size. The figures gathered by Compass Risk Management paint a vivid picture of the vulnerability of handysize and small/coastal vessels

Vessels below 30,000 DWT are more likely to suffer attack than larger ships. According to the research the problems facing smaller ships can be attributed to:

Lower freeboard making boarding easier.•

Smaller crew size offering less on-board security.•

Relative lower speed of smaller vessels.•

Lower vessel/cargo value works against expense of additional security measures.•

Age ConcernStudies at the Greenwich University have focused also on the age profile of vessels attacked and then hijacked.

From the research it is clear that the Somali Pirates have a strong preference for newer, if not very new vessels. Almost one out of every three (32%) attacks has been mounted against a vessel aged up to five years old.

One out of every five (19%) vessels pirated was relatively new (less than five years old). Despite this penchant for targeting “young” vessels, Somali pirates are far more effective in their attacks on older vessels (those aged more than twenty five years old).

Almost one out of every five (18.5%) vessels attacked is more than twenty five years old, while more than one out of every three (>33%) vessels pirated belongs to the same range of age. These figures point to the fact that older vessels aren’t targeted as often as others, but when they are they are far more likely to fall victim to an actual hijacking. The pirates are seemingly far more “effective” when they attack older vessels.

It seems that many of the problems facing smaller vessels can perhaps be applied to older ones too. Given that less discerning charterers are likely to use such vessels it will be the norm for such vessels to have less investment, they may be slower or have mechanical problem, there could well be a smaller crew complement and while we can’t cast aspersions on all older vessels, it is perhaps likely that the crew training and experience may be lesser.

Older vessels may also have less advanced or reliable information and communications technology onboard.

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SAMI Goes LiveThe website for the Security Association for the Maritime Industry (SAMI) has now gone live www.seasecurity.org.

SAMI provides an independent regulatory trade association for maritime security companies. This is achieved by a level of regulatory discipline and scrutiny to ensure that the maritime industry can easily identify reputable maritime security companies.

The standard of security providers is increasingly being viewed and assessed. The IMO recognises that the use of armed personnel on board ships is increasingly widespread and their interim guidelines are the current industry benchmark.

Having clear standards in place ensures that quality security providers are able to come to fore, which is important as there is real fear that inappropriate use of force could lead to an escalation in violence, and that control, vetting and standards are the only way to be sure of who is out there protecting commercial shipping.

For SAMI the hard work has only just begun on this issue, but things will change quickly now and they will look to lead these efforts on behalf of their membership. It is imperative that the maritime security industry is seen to embrace the need for standards, to engage on the means of establishing them and is then swift to put them into effect.

SAMI provides reassurance and guidance, where none has existed before and establishes the benchmark for standards within the industry. As a Non Governmental Organisation (NGO), the association represents the industry at an international level, providing input to the International Union of Marine Insurers (IUMI), the Lloyd’s Market Association as well as the International Group of P&I Clubs.

There is also a wider remit which gets the perspective on security from practitioners into the military through the Senior Leaders Forum and within the corridors of power within government and the armed forces.

The membership encompasses maritime security providers, consultants, trainers, individual operatives and the maritime security equipment, technology and hardware manufacturers. Seacurus’ Risk Analyst Steven Jones is a co-founder of SAMI and so please email [email protected] to get an inside track on developments or if you have any queries or concerns regarding maritime security providers.

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Tel: + 44 (0) 191 4690859Fax: + 44 (0) 191 4697940


Legal Expenses Cover CommentaryLast month Seacurus introduced their new insurance product providing reassurance to their clients who have chosen to employ armed guards on-board their vessels that their legal defence costs can be covered by their, “Shipowner’s Legal Expenses Cover for the Carriage of Armed Guards”.

As we have discussed in the associated product Q&A, there are many risks related to placing armed guards on-board. Lethal weapons by their very nature carry with them potential for death and serious injury, whether to crewmembers or innocent fishermen alike.

While the use of armed guards provides a degree of assurance against piratical attack, the practice is presenting concerns for masters and shipowners who fear the liabilities that they may face both personally and corporately as a result of the negligent uses of arms and lethal force. Indeed, there are a number of ambiguities relating to the rules of engagement and the associated use of lethal force, and many renowned legal commentators have warned that the many complications facing armed teams may lead to trouble ahead.

With this in mind, the aforementioned cover will respond when the insured shipowner, it’s corporate officers, ship’s master and crew are cited in legal proceedings (civil or criminal) following allegations of killing, maiming or personal injury arising as a direct consequence of the actions of armed guards carried lawfully on-board the insured’s vessel.

Initial feedback Seacurus have received suggests that there does appear to be a degree of confusion about the cover and any potential overlap with other insurances, particularly P&I.

To make it clear there are some overlaps with an owner’s P&I cover but they are limited.

In many circumstances following an incident which gives rise to a criminal prosecution of the type contemplated by this cover, Club Managers MAY exercise their discretion and pick up criminal defence costs particularly where there is an underlying P&I liability which would benefit from the successful defence of the criminal action. However criminal defence costs are NOT expressly covered and absent some associated P&I claim / liability it is unlikely that the clubs would cover such costs.

To the best of our knowledge the IG Clubs have no experience to date of how their directors would respond in such circumstances. The only similar experience the Clubs have to support an argument that they would respond are cases such as the Marchioness/Bowbelle and the Herald of Free Enterprise disasters where criminal prosecutions were brought that were inextricable linked with the issues of civil liabilities arising from these ferry disasters. On the flip side in criminal cases brought in the US for allegations of OWS irregularities the Clubs have not always been quick to step forward, wary of becoming embroiled in a criminal action brought by US criminal prosecutors.

In the case where a rogue gunman steps outside the strict rules of engagement as agreed by the corporate, master and on-board security guards resulting in the death or maiming, of innocent crew, fishermen or the pirates themselves, it remains to be seen how the Clubs will respond.

One leading P&I Club manager described this product as a corporate’s “peace of mind” cover. It provides certainty in areas where conventional P&I cover may not be available or may be discretionary or dependent on their being a covered liability closely linked with the criminal prosecution.

If we have any further questions concerning this coverage please contact;

Captain Thomas Brown [email protected]

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going west - seacurus ltdseacurus.com/newsletter/issue7.pdf · 2015-04-09 · going west image -...

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