Moscow Reinsurance Forum with Somali Ambassador calls on Piracy Insurers to tidy cover, and on IMO for more action

At the XIII International Reinsurance Forum in Moscow, a Round Table discussion took place on the subject of “Piracy: Everybody’s Problem.”

Panelists for the forum included His Excellency Dr Mohamed M Handule, Somali Ambassador to the Russian Federation; Capt. Vladimir Gudko and Capt. Sergey Gudko, Ukraine, surveyors, lawyers and managers of vessels traversing the Gulf of Aden; Mr. Vladimir Voytenko, Russia, Editor of Sovfracht Bulletin and present at the Faina arrival in Kenya. The Moderator was Mr. George Grishin, Oakeshott Insurance, London-Russia-Ukraine, insurance broker / ship owners’ consultant in certain piracy cases.

This is a summary of the Panelists’ comments.

Mr. Grishin The available insurance against piracy is ‘untidy’. Much piracy-zone additional premium goes to War Risk underwriters, who do not cover piracy. Kidnap and ransom underwriters charge escalating premiums, selling cover which hasn’t yet paid a single large piracy claim. Brokers sell the services of armed / unarmed “security” specialists. In contrast, most of the ransoms paid so far have been borne by hull and cargo underwriters, always with reservations and with lawyers ‘assisting’. An unexpected development appeared in the 2009 Cargo Clauses (ICC (A), namely a wide definition of “terrorism” and similar actions, but no definition of Piracy. Is this designed to help insurers to reject (quasi)-piracy claims in future?

Dr. Handule The Somali piracy problem has definitely been created by sources outside the country. Somalia in general has a sound economy, being rich in uranium and fishery resources. However some forces are interested in keeping the region destabilized. Their interference ranges from vessels of one major Western flag constantly dumping garbage in Somali waters to much broader actions. It is obvious to Somalia that the Pirates are so well guided to targets that their information must have come from foreign sources. Dr Handule, and the Somali government, would welcome any practical steps to solve the problem.

Mr. Voytenko Somali pirates are now able to target container vessels, whose cargo is saleable. Only armed forces are effective. (The onward sale of the Faina cargo was only averted by the US navy’s prompt action. Ukrainian Special Forces concluded negotiations and delivered the ransom.) However the general situation could escalate out of control, with pirates joining international organised crime to target deepwater boxships; and then the entire Indian Ocean would be unsafe.

Capt. V. Gudko The region now has the largest concentration of naval vessels since WWII. A comprehensive solution is needed as ‘preventative medicine’. The only international organisation with sufficient powers to tackle piracy is IMO. IMO is doing good work, and needs to be encouraged to do more. It would assist the maritime industry if the ISPS Convention amendment could clarify the measures which a ship’s crew can take to prevent capture / to defend the ship during an attack. Also, IMO needs to clarify the navigation procedures, publish the safety corridors details, make convoy organisation and schedules common knowledge and clearly explain whom the attacked vessels should contact at every coordinate in a danger zone.

The participants in the Round Table Discussion unanimously passed a Resolution to inform IMO, the Insurance Market and the Media of the issues discussed. Please note the full text of the Round Table discussions is being prepared.