Tanker hijacking is a concern for the market.
The recent hijacking of an tanker carrying $100m worth of oil as journeyed through waters off the east coast of Africa has sent shockwaves around Lloyd’s. The region where the Sirius Star was seized is known to be an area where piracy is particularly prevalent. In May this year, Lloyd’s Joint War Committee – which represents the interests of insurers underwriting war and related risks – highlighted the Gulf of Aden as an area where there was “enhanced potential to cause a danger to ships or their crews”.
However, the sheer audacity of the Sirius Star hijacking has taken many by surprise. What has come as a shock to underwriters is the fact that pirates have managed to successfully hijack such an enormous vessel. At 333-metres long, the Sirius Star – which was carrying two million barrels of crude oil – is the largest tanker ever hijacked. To give an idea of scale, the Canary Wharf Tower – at 244-metres tall – is approximately two-thirds as high as the Sirius Star is long.
The hijack has certainly caused considerable concern at One Lime Street, and insurers are aware that they need help from international governments to tackle the problem. Indeed, underwriters are urging governments to boost the presence of armed forces in the region.
Commenting this week on negotiations Lloyd’s has had with the Government about the matter, Neil Smith, senior manager at the Lloyd’s Market Association, said: “Underwriters have met with Government representatives on a number of occasions – the UK Government is aware of the problems and is taking a lead within the EU on providing an expanded naval presence in the area.”
In addition to putting pressure on the European Union to address the problem of piracy off the east African coast, Lloyd’s has also raised the issue with NATO. Lloyd’s recently co-hosted an event with NATO where the topic of “energy security” was discussed.
Lord Levene, chairman of Lloyd’s, said this week that he hoped joint action from the EU and NATO could lead to a crackdown similar to the successful purge of piracy off the coast of Indonesia. He said: “We hope that the combination of EU and NATO action can mirror the success of dealing with piracy in the Malacca Straits – further investment and closer co-operation between industry and governments internationally will be vital to defeat this threat in the long term.”
Lloyd’s underwriters will be hoping the EU and NATO will be able to intervene and deny the pirates their bounty, otherwise there could be some hefty insurance claims to be paid.
