Skip to main content
main content, press tab to continue
Article

Piracy and maritime crime: Addressing the risks for the maritime industry

By Patrick Rogers | May 1, 2024

Maritime crime and piracy attacks have decreased consistently over the past decade, but some regional hotspots remain. How can insurance help shipowners ensure business continuity?
N/A
Geopolitical Risk

Last year’s annual reports on maritime crime and piracy may have made for some lurid headlines worldwide, but a deep dive into the underlying data reveals a consistent decrease in attacks on the commercial fleet for the past decade.

According to the latest annual report from the ICC’s International Maritime Bureau (IMB), the number of ‘actual and attempted’ attacks rose marginally, to 120 in 2023 from 115 in 2022; however, the number of attacks for both years remained signifi­cantly below those witnessed each year from 2019-2021.

The IMB’s global numbers combine ‘piracy’ and ‘armed robberies’, which are significantly differ­ent types of events and need to be accounted for and responded to as such for the reasons discussed below.

The main increases occurred in Southeast Asia, particularly offshore Indonesia, where 18 events were recorded compared with 10 in 2022. Both years represented a rise from the 9 attacks in 2021, but they also continued the overall downward trend from the 26 and 25 events recorded in 2020 and 2019, respectively.

Another Asia regional hotspot was the Singapore Straits (37 attacks last year against 38 in 2022), where ships, many at anchor, continued to be tempting targets for maritime bandits.

Most, if not all, of the attacks in Southeast Asia would be more accurately described as ‘armed robberies’; none involved ‘hijacked’ vessels,
hostage-taking or kidnap-for-ran­som scenarios, the trademarks of ‘piracy’. As marine insurers and security organizations are tasked with providing solutions, this is an important distinction when identifying risk levels and deploying defensive resources.

In South America, offshore Peru continued to be troublesome for shipowners and their crews, with 13 criminal boardings recorded.

According to IMB data, there were four ‘hijacks’ last year, compared with two in 2022; those factors contributed to a rise in hostage-takings and kidnaps (87 last year compared with 43 in 2022).

But, even within the ‘hijack’ distinction, not all events/trends should be viewed as statistically equal when it comes to the inherent risks, potential costs and deployment of the physical, strategic or policy-based resources required for defense.

For example, the modus operandi of attacks by Nigerian pirates tends to involve a smaller number of crew being taken (3–5 removed from the targeted ship, on average) than during Somali incidents, where the entire ship and its crew can be taken.

A case in point was the hijacking of the MV Ruen in December with all 17 crew members. The ship and all its crew were recovered by the Indian Navy on March 15. But, clearly, this was a more impactful event for the seafarers, shipowner and its insurers than any of the armed robberies off the coast of Jakarta.

Yet, from a statistical perspective, both are represented equally in last year’s record of 120 actual and attempted events.

The hijacking of the MV Ruen was the only such event attributed to Somali pirates last year (there was a more recent hijacking on March 13), and the former event was the first by Somali pirates since 2017. The other three hijackings last year took place in the Gulf of Guinea, the global epicenter for piracy for the past 6–7 years.

The latest data from the Marine Domain Awareness For Trade – Gulf of Guinea indicates there were 37 instances of broader maritime criminality in this gulf last year. Even there, the annual number of attacks has been trending downward.

The geopolitical influence

For some observers, the recent re-emergence of Somali pirates is driven by the opportunities from regional conflict; an escalating number of Houthi attacks against the commercial fleet in the Bab al-Mandab Strait saw the average number of transits through the Red Sea drop from 75 in early December to 46 in the week leading up to January 14, according to Lloyd's List Intelligence. Many of those vessels, particularly the containerships, opted to take the 4,000 mile detour around Africa, rather than risk being targeted in the Red Sea.

Many of the world’s biggest container, bulk and oil carriers are avoiding the Red Sea, unless accompanied by armed escorts, an expensive proposition; the Houthis are now reportedly blocking about $10 billion in cargo a day and containership owners who divert around Africa on the China-Europe trade are seeing about $1 million in additional fuel costs alone for each round trip.

$10 billion worth of cargo per day is reportedly being blocked by the Houthis

While maritime crime is generally driven by multiple causes, the theory that the
re-emergence of Somali attacks are being spurred by the diversion of traffic from the Red Sea holds some water; the quickest route from the Gulf of Oman to South Africa’s Cape of Good Hope takes more commercial ships within the reach of Somali criminals. The MV Ruen, for example, was taken about 380 nautical miles (nm) east of the Yemeni isle of Socotra.

In fact, the March 13 attack against the MV Abdullah, which reportedly took place about 600 nm off Mogadishu, potentially signified a return to the pirates’ traditionally wider theater of operations (around 1000nm off the Somali coast).

The causes of piracy

Attacks in the Red Sea may have raised opportunities for pirates in East Africa, but the traditional causes for the wider aspects of maritime crime have deeper economic roots. For one, a global crackdown on illegal, unreported and unregulated (UUI) fishing has been cited as a potential driver in Somalia, Indonesia and other countries where illegal fishing fleets are often based.

UUI fishing itself has depleted stocks and forced fisherman to look for other work, legal or otherwise; illegal fishermen are now in the same unemployment queues, potentially swelling the ranks of a wide range of maritime criminals in already impoveri­shed coastal towns where fishing is the main source of income.

A recent report from the University of Maryland also identified causal links between climate change’s impact on ocean temperatures – which is depleting fish stocks in areas such as Somalia - and rising incidents of maritime crime.

The cost of maritime crime

Several years back, Europol described global piracy as ‘a growth industry, netting hundreds of millions of euros for pirates’ since the turn of the century from the armed plunder of goods, payrolls and kidnap for ransom.

The number of attacks may be in decline since the peak of Somali activity in 2011, but pockets of related activity still arise and impact upon shipowner costs. Insurance rates can be expected to increase in high-risk areas.

100+ Seafarers were kidnapped, taken hostage, threatened, assaulted or injured last year by maritime criminals

And then there's the human cost. According to the latest IMB report, more than 100 seafarers were kidnapped, taken hostage, threatened, assaulted or injured last year by maritime criminals. While no lives were lost, the number of incidents were almost double those recorded in 2022, but half those recorded in 2019 and 2020.

Defending against maritime crime

Other than armed escorts and onboard security teams, industry best practice for defending against maritime crime is found in BMP5, an advisory document published by the Oil Companies’ International Marine Forum. It's backed by most of the world’s leading shipping organizations, such as the International Maritime Organization and the Baltic and International Maritime Council. 

From a risk transfer perspective, there are plenty of policies offered by insurers that help to protect assets and business continuity. At WTW, maritime piracy solutions are designed flexibly enough to fit around an organization's requirements and exposures, including people risks.

They can be designed to protect against a range of perils from kidnap, illegal seizure and hijack to cyber extortion, boarding and piracy itself; insuring for costs associated with ransom, legal liabilities, personal accidents, response advice and loss of hire.

Insured persons can include masters, officers and crew, supernumeraries and any person legally onboard the insured ship with permission of the insurer and/or the vessel’s master.

For smarter ways to protect your ship and crew against maritime crime and piracy, please contact us.

Author

Head of Risk Advisory – Alert:24, Crisis Management

Contacts

Richard Scurrell
Global Head of Special Crime
email Email

Head of Marine, Western Europe

Related content tags, list of links Article Marine Geopolitical Risk
Contact us