Tag Archives: Piracy

Piracy Is Still a Risk; Pandemic Hasn’t Helped

August is International Pirate Month – mainly, I suppose, because it’s fun to say “Arrrg-ust” like a Caribbean swashbuckler from the movies.  But many people outside the maritime and insurance industries don’t realize that piracy remains a costly peril in the 21st century – and, like so many other risks, it may have gotten worse during the COVID-19 pandemic.

Global insurer Zurich estimates the annual cost of piracy to the global economy at $12 billion a year and, according to the International Maritime Bureau’s Piracy Reporting Centre (IMB PRC), global piracy and armed robbery numbers increased 20 percent in 2020. IMB PRC’s latest annual report lists 195 actual and attempted attacks in 2020, up from 162 in 2019. It attributes the rise to increasing incidents within the Gulf of Guinea in Africa, as well as increased armed robbery activity in the Singapore Strait.

In its Safety and Shipping Review 2021, global insurer Allianz says, the Gulf of Guinea accounted for over 95 percent of crew members kidnapped worldwide in 2020.

“Last year, 130 crew were kidnapped in 22 separate incidents in the region – the highest ever – and the problem has continued in 2021,” the report says. “Vessels are being targeted further away from the shore – over 200 nautical miles from land in some cases.”

The COVID-19 pandemic may have played a role in this rise in pirate activity, as it is tied to underlying social, political, and economic problems.

The economic effects of the pandemic have been especially devastating in parts of the world where piracy tends to be a problem: job losses, negative growth rates, and increased poverty. According to the International Monetary Fund (IMF), China is the only major economy projected to have a positive growth rate in 2020. The economies of most other countries have shrunk, some by more than 9 percent. Overall, the global economy likely shrank by at least 4 percent in 2020, and the World Bank expects an additional 150 million people have been pushed into poverty.

The economic costs of the pandemic have been particularly challenging for piracy-prone countries, and pre-COVID economic conditions in many of these places almost certainly means slower recoveries. 

“Pirates, criminals, and terrorists exploit poverty and desperation to seek recruits, gain support, and find shelter. To counter these threats, we need to raise awareness and educate people, especially youth, while providing alternative livelihoods and support for local businesses,” said Ghada Waly, Executive Director at the UN Office on Drugs and Crime.

Pandemic’s impact on crews

Crew relief is essential to ensuring the safety and health of seafarers. Fatigued crew members make mistakes, and there are serious concerns for the next generation of seafarers. COVID-19 is affecting training, and the sector may struggle to attract new talent due to working conditions.

Reduced availability of well-trained crews could leave vessels more vulnerable as the global economy and international trade rebounds.

In March, the International Chamber of Shipping warned that lack of access to vaccinations for seafarers is placing shipping in a “legal minefield” and could cause disruption to supply chains from cancelled sailings and port delays.

“Vaccinations could soon become a compulsory requirement for work at sea because of reports that some states are insisting all crew be vaccinated as a precondition of entering their ports,” Allianz writes. “However, over half the global maritime workforce is currently sourced from developing nations, which could take many years to vaccinate. In addition, the vaccination of seafarers by shipping companies could also raise liability and insurance issues, including around mandatory vaccination and privacy issues.”

COVID-19’s confounding implications for international piracy were illustrated last month, when more than 80 percent of a South Korean anti-piracy unit serving a mission off the coast of Somalia were found to have tested positive and were airlifted out. South Korea’s defense ministry has said the unit left the country in February unvaccinated. The government has defended the decision, citing lack of vaccine availability at the time.

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Insuring marine businesses and cargo

From the Triple-I Blog:

COVID-19 and shipping risk

A brief history of ransom insurance

Did you know that ransom insurance is one of the oldest insurance coverages out there?

People needed insurance because of pirates

Beginning in the early 16th and continuing into the 19th century, state-supported pirates and privateers operating out of North African coastal cities (the “Barbary States”) preyed upon European and colonial commercial shipping.

One lucrative practice was to capture a ship and sell everyone on board into slavery. We don’t know exactly how many people were captured over the centuries, but they probably numbered in the hundreds of thousands. You may have even heard of one particularly famous captive: Miguel de Cervantes, author of Don Quixote.

(Fun fact: some of the first military conflicts for a young United States were the “Barbary Wars” from 1801 – 1805 and again in 1815 – 1816, which were attempts to stop pirate depredations on American shipping. One researcher estimated that the annual costs of Barbary piracy to the U.S., including insurance costs, were equivalent to $10 billion to $20 billion in terms of today’s economy.)

How did ransom insurance work?

Slaves could generally regain their freedom in two ways (if you don’t count mounting a daring escape). One was to convert to Islam – the Barbary States were Muslim and most of their captives were Christian.

A second way was to pay a ransom.

In the early days, churches and families would set up collections to help pay for the release of enslaved captives. That’s how Cervantes was freed in 1580. But starting in the 17th century, cities and states also began to set up ransom insurance pools.

One of the first pools, called the “Sklavenkasse” (literally: “slave insurance”), was established in the German port city Hamburg in the 1620s. That’s over 60 years before Lloyd’s coffeehouse was first mentioned as a proto-insurance shop.

Other places soon followed suit with insurance pools of their own. Individual sailors, churches, and shipping organizations would typically contribute to these pools, which paid out when a participant was captured by Barbary pirates and held for ransom. There were even established rates for how much a ransom should cost: a steersman could fetch 700 Reichstaler (the currency used in Germany at the time), while a common sailor cost a mere 60 Reichstaler.

(For the German speakers out there, you can read more about how the pools worked here.)

Ransom insurance today

Although Barbary piracy faded away in the 19th century, ransom insurance is still available today, usually for important individuals who travel to dangerous regions. Called “kidnap and ransom insurance”, it generally reimburses for ransom payments and other damages, including some medical payments.

And because criminals are creative, we also now have “ransomware” insurance, which covers costs from a ransomware attack. That’s when a hacker freezes a computer system – and will only unfreeze it in exchange for a ransom payment, usually in bitcoin. How the times have changed.

Maritime Piracy Falls, But Dangers Remain

Piracy on the world’s seas has reached a five-year low, with 297 ships attacked in 2012, compared with 439 in 2011, the International Chamber of Commerce (ICC) International Maritime Bureau (IMB) global piracy report revealed today.

Worldwide  numbers  fell  thanks to a huge reduction in Somali piracy, though East and West Africa remain the worst hit areas, with 150 attacks in 2012, according to the IMB report.

Globally, 174 ships were boarded by pirates last year, while 28 were hijacked and 28 were fired upon. IMB’s Piracy Reporting Centre also recorded 67 attempted attacks.

The number of people taken hostage onboard fell to 585 from 802 in 2011, while a further 26 were kidnapped for ransom in Nigeria. Six crewmembers were killed and 32 were injured or assaulted.

A press release cites Captain Pottengal Mukundan, Director of IMB:

IMB’s piracy figures show a welcome reduction in hijackings and attacks to ships. But crews must remain vigilant, particularly in the highly dangerous waters off East and West Africa.†

In Somalia and the Gulf of Aden, just 75 ships reported attacks in 2012 compared with 237 in 2011, accounting for 25% of incidents worldwide. The number of Somali hijackings was halved from 28 in 2011 to 14 last year.

IMB says navies are deterring piracy off Africa’s east coast, with pre-emptive strikes and robust action against mother ships. So too are private armed security teams and crews’ application of “Best Management Practices†.

But the threat and capability of heavily armed Somali pirates remains strong.

Follow the IMB record of piracy and armed robbery incidents on Twitter and view latest attacks on the IMB Live Piracy Map.

The Washington Post has more on this story.

Maritime Piracy At Record Levels

Today we take to the high seas to bring you latest reports of a surge in world piracy attacks and the resulting cost to the economy.

The number of people taken hostage at sea and the number of vessels taken in 2010 rose to record levels, according to  annual  data  from the ICC International Maritime Bureau’s Piracy Reporting Centre (IMB).

Pirates captured 1,181 seafarers in 2010, up 12.5 percent from 1,050 in 2009, while a total of 53 ships were hijacked in 2010, of which all but four occurred off the coast of Somalia. Eight crewmembers died in these incidents.

Overall, ships reported 445 pirate attacks in 2010, up 10 percent from 2009, the IMB said.

The IMB describes the continued increase in these numbers as “alarming†:

As a percentage of global incidents, piracy on the high seas has increased dramatically over armed robbery in territorial waters.†

Hijackings off the coast of Somalia accounted for 92 percent of all ship seizures last year, with 49 vessels hijacked and 1,016 crew members taken hostage. A total of 28 vessels and 638 hostages were still being held for ransom by Somali pirates as of 31 December 2010.

While attacks off the coast of Somalia remain high, the good news is that the number of incidents in the Gulf of Aden more than halved last year, with 53 attacks in 2010 down from 117 in 2009.

The IMB attributed the reduction to the deterrence work of naval forces that have been patrolling the area since 2008 and to ships’ application of self-protection measures.

An article in the Washington Post has more on this story. Follow the IMB record of  piracy and armed robbery incidents  on Twitter and view latest attacks  on the IMB Live Piracy Map.

Meanwhile, Insurance Journal reports that a new study from think tank One Earth Future (OEF), estimates that maritime piracy cost the international economy between $7 billion and $12 billion in 2010.

OEF’s calculation includes costs related to ransoms, insurance premiums, re-routing ships, security equipment, naval forces, prosecutions, anti-piracy organizations, and cost to regional economies. OEF noted that the numbers could change substantially as the economy rebounds from the current economic recession.