The International Union of Marine Insurance & Piracy

By Sam Ignarski, Special to Piracy Daily

In recent weeks in the posh environs of the Park Plaza Westminister Bridge Hotel, the annual conference of the International Union of Marine Insurance has taken place. This is a three-day event attended by underwriters—but not brokers—from all over the world. There were altogether three presentations that dealt with the issue of piracy.

Although piracy is as old as maritime commerce and pirates have been deemed the “enemies of mankind” since classical times, it seems fair to say that the proliferation of piracy in Somalia caught the maritime world by surprise and the initial response by the legal and insurance parts of the business to the rash of Somali losses was rather ponderous. Ponderousness is not necessarily an unbecoming virtue in underwriters, especially liability underwriters. When faced with something she or he does not understand, your typical marine underwriter would rather decline a risk than join in to partake of the thrill of the unknown. Similarly, the claims managers in the back office are invariably at first blush loath to confirm cover when faced with novel or highly-unexpected claims.

Today, going by the presentations given at IUMI, the industry has more of the measure of modern piracy.

The paper by Chris South of the West of England P&I Club was a very good primer on the growing corpus of laws, guidances, advices and recommended measures which arise in connection with piracy and armed force. It is interesting that Mr. South was chosen for this task. IUMI is a creature of insurance companies and at least traditionally, Mutual P&I Clubs were considered “others.” Mr. South sat on the Guardcon Drafting Committee at BIMCO. You can see from his main points that the piracy regulatory and legal field has plenty of content these days. Beware of illegality he warns. Don’t gloss over the general issue of licenses. Comply with flag state law, do your diligence under IMO 1405 & 1443 and keep in mind the ISO/PAS 28007 certification.

Getting down to brass tacks Mr. South also mentions the GUARDCON model contract, the rules for insuring PMSCs, and the Rules for the Use of Force, whilst reminding the audience that none of these things is a substitute for Best Management Practices (BMP). Masters and seafarers are no doubt grateful to the maritime legislators and guidance givers for their work.

You can see from the sheer newness of most of the rules and measures that merchant shipping is, for all its roughness, part of civilization, in that it expects more or less peaceful and settled operating conditions and that by instinct, history and first principles, it eschews armed force.

After Mr. South’s lecture on the rules came attorney Claudio Perella, of LS Lexjus Sinacta, Italy, with a salutary case study on when things hit the fan using armed guards. He presented on the case of the Italian oil tanker Enrica Lexie [pictured above], which was sailing from Singapore to Egypt in February 2012 with a crew of 34 and an escort of six Italian marines from the San Marco Regiment (who were members of the Italian Navy “Vessel Protection Detachment”).

There are at least two versions of events but certainly two fishermen were killed by the guards from the ship’s bridge (they are under trial in India) and certainly the trawler, by not giving way, was steered in a peculiar manner. Perhaps, Mr. Perella suggested, they were fishing where they weren’t supposed to and were holding position to protect their nets. In the use of armed force on board ships, as in so much else, only God is perfect.

It was the cargo workshop section of proceedings which heard the words of Jim Mainstone, the head of Intelligence at brainy, Oxford-based analysts Gray Page on piracy in west Africa. The paper was subtitled “Old Peril, New Threat” and reminded listeners that piracy was a specialist area of a general criminal foible. Concentrating on the losses of petroleum product, he described piracy in a way that most of his listeners were accustomed to hearing it described, as a kind of mugging at sea.

Forget about Somalia and SE Asia, Mr. Mainstone said, for this kind of crime, West Africa is the place for warily treading. He supplied some interesting facts. He said the reporting was confused (whether deliberately or not), that the cargo hijackers had good intelligence and targeted vessels specifically. They liked to work the hours between 2200 and 0300hrs, preferably on Fridays to Sundays. A typical attack might involve 2 or 3 skiffs or speedboats carrying between 7 to 15 armed men. These pirates often use violence and employ poles, grapples and ladders. They accordingly are partial to ships of low freeboard. Some 40% of attacks did not result in cargo loss.

What do these presentations between them disclose about the general state of the marine underwriting mind these days? Well, the awkward subject of piracy and the use of armed guards is on its way to being subject to the same bevy of laws and regulations that the rest of commerce is liable to face these days. That the use of force on merchant ships is controversial, dangerous and not something ship owners have much of a liking for. Needs must.

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Sam Ignarski is the editor of FOB, Facebook-like site for the maritime classes. The papers mentioned in this review can be downloaded from the Piracy Group there. Go to http://www.fobnetworking.com.