Piracy and Armed Guards
Piracy and use of armed guards - Part 1: General overview (revised 31 July 2012)
UPDATE : Piracy & Use of Armed Guards (Member Alert, 3 October 2011)
Piracy International group FAQ (revised September 2011)
Piracy: Criminal Liability Risks when using Armed Private Security Teams - German government's position (September 2011)
General Information about Piracy
BMP 4 - Best Management Practices for Protection against Somalia Based Piracy (August 2011)
Guidance relating to the Construction and Use of Citadels in Waters Affected by Somalia Piracy (July 2011)
Loss Prevention section
Kidnap & Ransom Insurance – now provided by The Swedish Club
Underwriting & Risk Control
The Club provides Kidnap & Ransom (K&R) insurance to its members from 1 February 2014, at a very competitive price for worldwide trading. In case a kidnap or ransom situation arises, the insurance provides cover for ransom payments and related costs as well as access to consultants and experts providing advice and assistance. Crew is covered for injuries sustained during time in capture as well as salary during and for a limited period following capture. The K&R insurance also includes post-event professionals to take care of the crew at a later stage.
Although there is now less piracy in the previously most active areas, such as Somalia and the Gulf of Aden, we believe that it is worth subscribing to K&R insurance. It is difficult to foresee what the future will bring and what hot spots for piracy there will be. This cover allows you to feel secure and know that if your vessel is taken by pirates, the Club will look after you and your crew’s best interests.
K&R cover developed together with industry experts
Financial protection up to a maximum limit of USD 30 million is provided, of which a maximum USD 10 million is dedicated to a ransom payment. The cover has been developed through close collaboration with K&R industry experts, making sure that all bases are covered and that it is in the best interest of our members. Placing 100% of your War as well as War Loss of Hire, including piracy and Kidnap & Ransom, with the Club, provides you with insurance with some of the best features and one of the most complete covers in the marine business, at a very low cost.
What the cover includes
The K&R policy includes cover for kidnap, ransom and hijacking and provides access to invaluable facilities such as highly skilled independent consultants whose fees are covered by the policy. The experts will be able to assist in negotiation, give advice on incidents and support our members throughout the ordeal.
Based on incidents experienced to date, ransom payments only accounted for 25% of the overall cost of the claim in certain cases. This caters for a response team with many years’ experience of crisis management and maritime kidnap, hijacking and ransom. The team provides immediate response to assist in any emergency and has successfully assisted the resolution of several incidents involving the hijacking of vessels and kidnapping of crew. They are also able to deliver any ransom payment agreed.
Some of the costs covered by K&R
Whilst a marine war risks policy may pay a settlement exgratia, in the event of a ransom demand, it does not cover the hidden costs/additional expenses such as:
- Hire of a vessel and crew to deliver the ransom
- Hire of security team to protect the ransom money, drop vessel and cargo
- Hire of medics with full medical kit to attend hostages once released should medical assistance be required
- Cost to transfer ransom money from bank to drop vessel
- Cost of insuring against theft in transit of ransom money
- Cost of insuring the ransom drop team
- Professional maritime advisors who support all manner of logistical and governmental handling
- Crew’s salaries during captivity and up to 6 months following their release
- Loss of earnings for relatives
Piracy – now and then
Between 1990-2005 piracy of petty cash and other private belongings was something that shipowners and crew saw as a nuisance when going through the Malacca Strait. Although this was a very unpleasant experience for crews exposed to it, it did not make any headlines in the majority of newspapers or newswires.
The subsequent hijacking of vessels off the Coast of Somali, the Gulf of Aden and later on the Indian Ocean is something that took marine insurers by surprise when it started back in 2007. Since then, vast amounts of money have been spent trying to reduce the success rate for pirates.
International naval forces have been deployed in these areas to provide convoy cover and assistance to vessels that are under threat of, or are, being attacked. Onboard counter measure equipment has been fitted on vessels and crews have been trained. Armed as well as unarmed security teams have been deployed on many vessels.
Reduced piracy attacks in Somalia and the Gulf of Aden
Insurance premiums for trading in the area have increased and various insurance products have been offered to shipowners for providing financial protection as well as assistance in the handling of the piracy for ransom incidents. A UN and World Bank report states that between 2005 and 2012 approximately USD 400 million was paid in ransom to Somali pirates. Since then the number of successful attacks has reduced significantly in the area as efforts to safeguard against attacks have been very effective.
Increasing attacks off the coast of West Africa
On the West Coast of Africa, and specifically in Nigeria, piracy attacks have however increased in frequency over the past two years. The Nigerian pirates do not normally hijack vessels for ransom like their Somali counterparts. Their main interest is stealing cargo, and in some instances, taking crew off vessels and holding them for ransom. (For further information on the subject, please see article in Triton No 3-2013).
The Swedish Club Marine Kidnap for Ransom and Hijack (K&R) Insurance is provided for events involving kidnapping or hijacking for ransom. Premiums are charged on an annual basis for worldwide trading with excluded areas for which trading can/may be allowed at an additional premium. The overall limit is USD 30 million per event without any deductibles and with sub-limits.
For full conditions, premiums, subjects and warranties please contact your team underwriter or Tord Nilsson, Director, Underwriting & Risk Control Email firstname.lastname@example.org
Member Alert is published by The Swedish Club as a service to members. While the information is believed correct, the Club cannot assume responsibility for completeness or accuracy.