300 years later, "Pirates" still plague insurers
Sat Jul 8, 2006 6:40 AM IST10
By Ed Leefeldt
NEW YORK (Reuters) - While audiences will flock to see "Pirates of the Caribbean: Dead Man's Chest" when it opens in movie theaters this week, insurance companies plagued by seaborne marauders may not find the film amusing.
Real life pirates are still the scourge of shipping lanes around the world, and the practice of insuring vessels, cargo and crews against them and other perils is a multibillion-dollar business.
"Piracy is a coverage that's been included in policies for hundreds of years -- ever since Blackbeard -- and it's never been dropped," said Nicholas Benson, a senior vice president for American International Group Inc.'s global marine division.
If anything, today's pirates are getting smarter, more brazen and better armed. The latest figures show global piracy rising 8 percent in the first quarter of 2006 from a year earlier, according to the International Marine Bureau, a trade group. In the past week, six attacks were reported.
In fact, piracy has become so severe that Lloyd's of London, the oldest maritime insurer, launched a new insurance coverage to protect crews, which are now in as much danger of getting hijacked as their cargoes.
"They can ransom them back to the shipowners faster and easier than handling and selling the cargo," said Captain Thomas Brown, a managing director of Seacurus, an insurance broker that handles these seafaring kidnap policies.
Last year, according to a British House of Commons report, there were 650 kidnappings at sea.
While times have changed since the early 1700s, when real-life pirates like Captain Edward "Blackbeard" Teach roamed the Atlantic and the fictional Jack Sparrow sailed the Caribbean, some pirate tactics are the same.
"They still come alongside with a grappling hook and board," said AIG's Benson. "If crews are awake and alert, they may try to blow them back into the water with fire hoses."
Modern pirates, like their earlier brethren, tend to operate in safe waters where they can find shelter and sell their booty. Now, instead of the Caribbean, they operate off the coast of Somalia, where the Horn of Africa juts into the Indian Ocean. Shipping that travels through the Red Sea has no choice but to run this gauntlet.
And while the Straits of Malacca, which links the Indian and Pacific Oceans, remain a hotbed, pirates are also stealing oil and gas -- even emergency medical supplies -- off the coast of Nigeria.
Many pirates are simply gangs in speedboats, but others have adopted an old pirate trick, taking over a ship, setting the crew adrift, then renaming and repainting the captured boat.
They take their "phantom ship" to a new port, pick up whatever cargo they can get, and then both the ship and cargo vanish. AIG uses specialist firms who try to track and catch the phantom ship with satellites before the cargo is sold.
"Speed is everything," Benson said. "The longer it takes, the more likely your cargo is to vanish into the black market."
© Reuters 2006. All Rights Reserved.
Bring some damn weapons!
