Seafarers face a growing threat from pirates off the coast of West Africa.
Piracy is back on the radar for mariners as the number of attacks on merchant ships increases off the coast of Nigeria, in the Gulf of Guinea.
Piracy was last in the headlines between 2008 and 2012 when Somali raiders were hijacking ships on the other side of the continent, in the Horn of Africa.
At its peak, nearly 30 vessels and their crew members were held to ransom by Somali pirates. The 2009 hijacking of MV Maersk Alabama in the Indian Ocean even resulted in a Hollywood blockbuster movie starring Tom Hanks, playing the eponymous Captain Phillips.
In 2018 all eyes were on West Africa and the Gulf of Guinea, however.
Globally, a total of 156 incidents of piracy and armed robbery against ships were reported to the ICC International Maritime Bureau’s (IMB) Piracy Reporting Centre (PRC) in the first nine months of 2018, compared with 121 for the same period in 2017.
Of all the reported incidents, 57 took place in the Gulf of Guinea and 37 of the 39 crew kidnappings for ransom globally occurred in the region.
Worryingly, the true number of incidents in the Gulf of Guinea is believed to be ‘significantly higher’ than what was reported to the IMB PRC, according to an earlier report.
The Gulf of Guinea frequently carries a ‘high threat level’ warning in the weekly Maritime Security Review bulletins issued by leading security risk management consultant MS Risk. MS Risk says the entire Gulf of Guinea region is a hunting ground for pirates and it advises vessels transiting within 100 nautical miles of Tema, Ghana; Lomé, Togo; and Cotonou, Benin to be particularly vigilant.
Hijackers take hostages
“The hijacking is done by murderous groups such as the Niger Delta Avengers. They hijack a vessel to steal the cargo and while they transfer the cargo they take crew as human shields for the getaway. They then ransom the hostages when they’re back to base,” according to Liam Morrissey, Chief Executive of MS Risk.
“Corruption among officials and businesses enables oil products to be reintroduced into the supply chain, sustaining the pirates’ activity.”
Piracy in the Horn of Africa region reduced after 2012 because owners and operators started to use armed guards on board vessels.
“The international naval presence also contributed to the decline in piracy in East Africa,” explains Morrissey. “But now we are seeing a big upswing in attacks in the Gulf of Guinea on the west coast.”
Nigerian law does not allow private third-party armed guards on board vessels and so ship owners often ask the Nigerian Navy to accompany their vessels in the area.
“You can hire the Nigerian navy to protect your vessels, however, it gets very expensive, very quickly, and they’re not always reliable,” Morrissey warns.
But owners and operators can take steps to reduce risk where armed security people aren’t allowed on board.
First, Morrissey urges ship owners to follow the shipping industry’s ‘Best Management Practices to Deter Piracy and Enhance Maritime Security in the Red Sea, Gulf of Aden, Indian Ocean and Arabian Sea’ (BMP5).
Now in its fifth edition, BMP5 helps mariners to risk assess voyages and ‘harden’ vessels against external threats.
“You can have unarmed guards that make a vessel harder to board and also create a bulletproof citadel where crew can muster,” Morrissey adds. “Make sure the company has a hijack crisis plan; do a risk assessment for what could go wrong and plan around it.”
Crucial kidnap and ransom insurance
Specialist kidnap and ransom (K&R) insurance is crucial because it includes access to security advisers such as MS Risk, who can provide pre-emptive training as well as crisis response services.
Although ransom reimbursement is the main head of cover with K&R insurance, the provision of response consultants is arguably the most important element, explains George Potter, Account Handler in JLT’s K&R team.
“They are the first point of contact in the event of an incident or threat and work side by side with clients in an incident. They have invaluable local knowledge, experience in negotiation and can deal sensitively with victims’ families and the company itself over crisis management,” Potter says.
Coverage for consultants’ fees and expenses is provided on an unlimited basis in K&R policies because it is hard to know how long a case will last and to what extent consultants need to be involved.
“Claims experience shows that costs can range from tens of thousands to millions of dollars if a vessel is taken for months or even years,” Potter says.
“Policy limits usually range between $5 million to $10 million, and include ransom reimbursement, loss of ransom in transit, and legal liability.”
Ransom demands are never publicly disclosed and are usually higher than final settlements. “We have seen demands in the multiple millions, but the actual settlement figure is often much lower,” according to Potter.
Policies are usually worldwide, with certain exclusions: the territorial waters of war torn Yemen and also Somalia are difficult to cover currently and are often excluded, Potter says.
“The whole point of the policy is to cover vessels in high-risk areas, but insurers do ask clients to exercise caution and will also include certain on-board security measures that need to be met as well as routeing requirements.”
Potter notes that K&R purchase is usually mandated by hull and war insurers for particular routes, but it’s hard for owner/operators to justify not putting protection in place.
“The coverage is extremely affordable and it makes good business sense from both a safety and duty of care point of view as well,” he says.
JLT Specialty’s marine and K&R teams work closely together to harness the expertise in both divisions to service our client’s requirements. Our marine team have successfully resolved 22 hijackings in the past few years and have extensive experience in handling piracy claims.
For more information, please contact John Betz, Senior Vice President, on 212-510-1854.
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