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Transportation of Cargo

New pirate hotspot off Africa´s west coast

While the situation off the coast of Somalia seems to be calming down, attacks in the Gulf of Guinea are on the rise. Whereas Somali pirates focus primarily on capturing ships and demanding ransoms, pirates operating off Africa’s western coast concentrate more on cargo. A comparison of the two high-risk areas.

15.11.2013

In the Gulf of Guinea, pirates extremely ready to resort to violence loot cargoes and other valuables or abduct crew members and hold them for ransom onshore. They concentrate on ships supplying offshore drilling platforms or waylay cargo ships near the ports. The taking of hostages is a recent development. Unlike Somali pirates, who hijack ships and take their crews hostage, west coast pirates have never yet hijacked a ship for ransom, but have taken crew members ashore in order to extort ransom payments.

In 2012, there were 27 successful attacks off the coast of Nigeria. Altogether, 61 people were taken hostage and four killed. This year, no fewer than 19 attacks had already been reported to the International Maritime Bureau (IMB) by the end of May. In view of the persistent conflicts over crude oil and the region's flourishing black market, it is presumed that only a fraction of the attacks are officially reported. IMB estimates put the actual number at three times the number of incidents reported. Lloyd's of London placed Nigeria, Benin and the adjacent waters in its "most hazardous for shipping" category back in 2011.

While the situation off the coast of Somalia seems to be calming down, attacks in the Gulf of Guinea are on the rise. Whereas Somali pirates focus primarily on capturing ships and demanding ransoms, pirates operating off Africa’s western coast concentrate more on cargo. A comparison of the two high-risk areas.
Trends in pirate attacks around the world from 2007 to 2012
The number of successful pirate attacks has declined to its lowest level in the last five years due to the major decrease in attacks o! the Somali coast. Even so, with a total of 150 attacks in 2012, east and west Africa are still the most dangerous areas in the world. Source: IMB Annual Piracy Reports from 2007 to 2012

Cause: severe social disparities

More and more gas and oil are being produced in the Gulf of Guinea. Crude oil and crude oil products now account for 95% of Nigeria's exports. Oil and gas tankers ply the seas everywhere off the coast, and it is they who are the main targets of the pirates. Despite its abundance of raw materials, Nigeria is a country of marked social disparities. Two-thirds of the populace live in poverty.

In the Niger Delta, oil pollution is destroying agriculture, aquaculture and fishing, and depriving local peoples of their livelihoods. The government and the military protect the big oil and gas companies that bring lots of money into the country – money from which the deprived draw hardly any benefit. Poverty and political injustice fertilise the breeding ground for crime and violence.

Positive trend off Somalia

In contrast to the situation off Africa's west coast, the figures for Somalia show a decline in pirate activity. However, IMB director Pottengal Mukundan warns against premature optimism. He believes the lower figures are clearly attributable to the efforts of international naval units, the presence of armed security forces on board and compliance with the best management practices specified in BMP4 (Best Management Practices Version 4). If these costly safety precautions were to be reduced, Mukundan says, pirates would very soon resume their former level of activity.

While fewer ships are now being hijacked by pirates off the Somali coast, crew members who are captured find themselves in a very different world where they may be tortured, maimed and held prisoner for months or even years until their ransoms are finally negotiated and paid. In 2009, the average period of captivity was 55 days, but by 2012, it had risen to roughly eight months. Ransom demands are increasingly in the tens of millions of dollars range.

Insurers have adjusted to the risk situation

Due to the development off Somalia, piracy was excluded from traditional hull cover back in 2009 and included in the hull war risks policy. For cost reasons, some shipping companies now do without a separate piracy cover within the framework of hull war risks insurance if they have armed security personnel on board their ships. Insurers are also increasingly likely to demand that armed security personnel accompany shipments of valuable consumer goods or industrial equipment that are to be covered by cargo insurance, particularly if such shipments are also to be covered against delays in start-up or other financial losses.

The market for kidnap and ransom covers has grown rapidly in recent years, thanks to special piracy products. "ERGO Special Cover Balance Protect", for example, is now also used by shipping companies to ensure rapid first support for employees traumatised by a hijacking.

Sustained improvement is still far off

Even though every available resource may be used to combat piracy at sea, the roots of this scourge are still to be found on land. As in the past, our remedies are focusing primarily on relieving the symptoms, rather than curing the disease. Neither the community of states nor shipping companies are able to guarantee the safety of maritime routes over the long term.

It therefore remains the task of the states involved to relieve poverty and establish law and order in the areas that are now hotbeds of piracy. But in this regard, there is still no land in sight.

Munich Re Experts
Tillmann Kratz
Senior Consultant for Facultative Risks and Corporate Underwriting
Dieter Berg
Global Marine Partnership, Head of Business Development
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