Insurers join forces to tackle piracy problem

Four insurers are interested in joining the JLT-funded project to create a private navy to protect ships from the increasing threat of piracy attacks, it has emerged.

Ascot, Griffin, Marketform and RSA are all lined up to be part of the Convoy Escort Programme (CEP).

The CEP aims to provide armed patrol boats to escort shipping through piracy-stricken areas such as the Gulf of Aden. The insurers would provide war risk and kidnap & ransom cover.

The CEP is planning an initial fleet of 18 patrol boats, each equipped with a number of faster, smaller boats.

The CEP was negotiating the purchase of the boats and equipment, Campbell said.

JLT gave initial investment to start up the project, but the CEP now needs further private investment.

CEP chief executive Angus Campbell said he hoped initially for EU funding, but realised it would take too long to obtain that support.

“If we want to talk to governments, that presupposes that there is someone there that wants to talk to you. This is one of the primary reasons we reconfigured our approach.

“We are finding that there are a number of investors and investment vehicles that are interested in a project like this,” Campbell said.

“We are very keen to get moving. We think the time for talking is over, that action is needed. This problem is getting more embedded, contracted and complex as every day goes by, let alone spending two years chatting about it.

“It’s designed to be a product that can be marketed and accessed through all registered Lloyd’s brokers – it genuinely is an industry project.”

JLT partner Sean Woollerson is CEP chairman and Marketform senior underwriter Angus Wilson is a director.

Campbell believes ship owners will respond positively to the project. He predicted that there will be an increasing number of piracy attacks around the world.

Piracy attacks usually pick up when the monsoon season draws in during September, as the calmer seas make it easier for pirate skiffs to travel around.

Research by Aon’s kidnap & ransom practice has shown that there has been a 17% increase in attacks from 2009/10 to 2010/11 across the Red Sea, Gulf of Aden, Somali Basin, Arabian Sea and Indian Ocean.

The number of pirate attacks off the east coast of Africa is increasing, with pirates venturing further away from the coast to make their attacks, according to the research.

“The costs and inconvenience of the Somali piracy problem are at an all-time high,” the report said.

However, the number of successful ship hijackings has decreased, according to the report.