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Can Britney Spears Ward Off Piracy?

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Britney Spears

Pirates remain a notable risk for businesses that involve maritime activities like shipping for supply or distribution. While it’s easy to dismiss the idea with images of wooden ships, gangplanks and a thoroughly unwashed Johnny Depp, the face of piracy has changed, but it has far from disappeared.

In the last decade, increased pirate activity out of war-torn Somalia have drawn considerable media attention, especially as hundreds of ships were attacked and dozens hijacked and their crews held hostage. Pirates earned an average of $4.87 million per ship in 2011, a huge financial toll for businesses that was only compounded by rising need for kidnap and random insurance for crews.

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Yet the Horn of Africa and the Suez Canal are not the most perilous seas. Australia’s News Limited reported, “Shipping industry figures show that the waters around Indonesia and the Malay Peninsula is the world’s hotspot for pirates.

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” The International Maritime Bureau found that Indonesia has experienced a more than 50% surge in pirate attacks in the first half of 2013. Of the 48 attacks reported, 43 involved pirates boarding vessels and assaulting the crew. West Africa has also grown as a hotspot, and the Control Risks RiskMap Maritime 2013 also highlighted high conflict potential at sea off South Korea, Nigeria, and Bangladesh.

RiskMap Maritime 2013Some experts are turning to more creative measures to ward off pirates, Time magazine reported this week. To deter pirates from approaching supertankers off the east coast of Africa, merchant navy officer Rachel Owens said ships have begun blasting the musical stylings of Britney Spears.

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“Her songs were chosen by the security team because they thought the pirates would hate them most,” Owens said. “These guys can’t stand Western culture or music, making Britney’s hits perfect.”

It’s a colorful approach to consider, especially as Hollywood turns a spotlight on mismanaged pirate attacks with the new Tom Hanks movie “Captain Phillips.” Let’s just not take it too far – as Steven Jones, of the Security Association for the Maritime Industry, told Time, “I’d imagine using Justin Bieber would be against the Geneva Convention.”

Somali Pirates: Attacks Down but Reach Spreads

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We’ve covered the pirate crisis in the Gulf of Aden numerous times — once in the February 2009 issue of Risk Management and twice more on this blog (The Rising Price of Piracy Insurance and Security at Sea).

Though the International Maritime Bureau (IMB) states that sea attacks worldwide fell by more than a third in the first quarter of this year, the attacks continue. Pirates are now increasing their area of surveilance and capture (it now includes the massive Indian Ocean) and though U.S. and foreign warships have been canvassing the area, the pirates have not backed down. In fact, their army and area of operation has seemed to grow.

This week alone, three Thai fishing vessels were seized in hijackings 1,200 miles east of Somalia in the Indian Ocean — the farthest from the Somali coast pirates have ever attacked, according to the EU Naval Force. A total off 77 crew were taken hostage.

And just yesterday, in the fourth attack in less than a week, pirates seized a bulk carrier — the Liberian-owned Voc Daisy — in the Gulf of Aden. The ship was heading from the UAE towards to the Suez Canal when it, along with its crew of 21, were taken hostage.

After a successful pirate hijacking, the shipping company that owns the vessel will, in most cases, immediately issue a ransom for the return of the ship and crew. But that may become a bit tougher for American ships should they fall victim to a pirate attack.

The shipping industry has long seen ransom payments to retrieve hijacked vessels, cargos and crews as a cost of doing business. But after Obama last week issued an executive order on Somalia, shipping officials say it’s no longer clear whether companies with U.S. interests can legally pay ransoms. The industry is worried because ransoms have been the only way to quickly and safely free hostages.

The order states it is illegal for anyone to supply financing to any Somalis involved in military activities. Contrary to that, the U.S. Treasury Department said it is not interested in prosecuting anyone trying to free hostages. This understandably puts shipping companies in a tough place.

“Taking away our ability to secure the safe release of our crew members and vessels could put us as an employer and ship owner in a very difficult position,” Moller said. “Thankfully we have not had to test such a scenario under these restrictions and it’s difficult for us to comment further on the consequences of the order without speculating.”

The IMB states that currently, pirates hold 14 vessels and 305 hostages.

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The IMB live piracy map illustrates where pirate attacks have occurred so far this year.

Maersk Alabama Fends Off Second Pirate Attack

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Somali pirates don’t give up — as we see today with the news that the U.S.-flagged Maersk Alabama was almost hijacked for a second time. Just seven months ago, the ship was attacked and its captain, Richard Phillips, was taken hostage on a lifeboat for five days. The standoff ended with Navy SEAL sharpshooters killing three pirates and rescuing Phillips.

In this most recent attack, a number of pirates fired automatic weapons at the Maersk Alabama, but this time, the ship fired back. On board was a vessel protection detachment (VPD), or a crew of armed guards assigned to the ship, who successfully thwarted the attack by firing their weapons and repelling the pirates.

In our January/February issue, I wrote a piece on the the escalating number of pirate attacks occurring off the coast of Somalia and the effect these attacks have on shipping insurance rates, stating that:

Shipping insurance rates have skyrocketed in the past year. BGN Risk, a corporate and specialty risk consulting firm, was recently reported as saying that piracy in the Gulf of Aden could increase insurance and transport costs by $400 million. The firm also stated that the “special risks” insurance levy for crossing the gulf has now skyrocketed to $20,000, up from $500 per voyage in 2007.

And that number continues to rise as pirates continue their attacks. These brazen ship-stealers try for just about any boat that sails towards their path. Almost three weeks ago, a British couple was taken hostage by Somali pirates as they sailed on their yacht in the Indian Ocean. Though they have spoken to the media through pirate-monitored conversations, stating they are being fed and taken care of, their whereabouts are unknown.

The following video shows how U.S. predator drones attempt to monitor Somali pirates — a feat that proves challenging.

The Rising Price of Piracy Insurance

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Back in our January/February issue, I covered the topic of piracy in “The High Seas of Risk.” Since then, the problem has only gotten worse. The brazen pirates have grown in size and have become increasingly fearless towards any sort of attempts to stop them.

As expected, the price of piracy insurance has skyrocketed. Just yesterday, The Wall St. Journal published a piece noting acknowledging the drastic rate increase.

‘In general, the price is up five- to 10-fold from 18 months ago,’ when the surge in piracy off Somalia began to take off, said Peter Townsend, executive director for the marine practice group at insurance broker Aon Corp. ‘The demand is there.’

The Insurance Daily website has also reported on the situation off the coast of Somalia and how it has ballooned kindap and ransom insurance rates.

Some insurers could be paying a premium of $30,000 for the $3 million of cover during one journey across seas that have become treacherous because of the activities of Somali pirates.

The New York Times featured an interesting video showing an Italian warships’s efforts to fight piracy in the Gulf of Aden. And below, a self-assured Somali pirate grants an interview with a local news station.