Although the ransom insurance is placed with certain Syndicates in the Lloyd’s market, Griffin-Underwriting uses Hart Security for the incident response and consulting services for clients.  As we discuss in many parts of the International Executive Security Monitor, a KnR program is only as good as the security expert that will be there “on the ground” in the event of an incident.  A $10,000,000 ransom benefit is essentially worthless without the proper consultant involved in the negotiation.

On arrival the HART Security Consultant will assist the family or business group and advise them on the most likely way in which the process of recovery will take place and how best to organize themselves. This activity takes place within the Crisis Management Team (CMT) that HART Security will help to establish.  The HART Security role is to support and advise the decision makers within the CMT, to allow them to follow a clear strategy and to avoid common mistakes in the negotiations. Their advice will always be in support of the objective – the safe return of the victim as quickly as possible.

Griffin has particular expertise in Maritime and Marine Kidnap and Ransom insurance and incident response and they provide a very informative PDF brochure on their maritime kidnap and ransom insurance as well as the tactics of Somali and other pirates and the maritime security measures that should be taken by each crew.  For example:

1. Liaising with naval vessels in high risk areas (letting them know you are there)
2. Having high pressure water hoses ready to go.  Many pirates in the past have been deterred with high pressure water believe it or not.
3. Fitting razor wire to the ship’s sides.  (pirate ships can be 30 to 50 feet below the deck)
4. Ensuring radio discipline so pirates cannot obtain information by monitoring channels
5. More is provided by contacting Griffin-Underwriting at info@griffin-underwriting.com   (or please contact McKinley International Risk Management to liaison with Griffin from North America)

As the success rate goes up, the cost of marine kidnap and ransom insurance goes up as well

For many shipping companies operating in the Gulf of Aden (as well as 3 or 4 other regions around the globe) a marine kidnap and ransom insurance policy or maritime KnR policy is now an essential part of doing business in the region.

Last year, the pirates attacked over 110 ships in the Gulf of Aden region, and the pirates were able to capture about 40% of the ships targeted, an incredibly good percentage that will just inspire  more maritime hijacking.

Kidnappers, with the Somali pirates being the most infamous, want to secure kidnap and ransom money for hostages and they totally ignore the millions of dollars of cargo these ships carry because they can’t move the product.  Actually, they have no port that can even doc these massive ships let alone move thousands of  pounds of cargo off the ship by crane.

Maritime and marine kidnap and ransom insurance policies, provided by certain syndicates of Lloyd’s of London for example, would pay a ransom benefit to pirates (for example, up to $3,000,000 or $5,000,000) and provide expert consultation to help get hostages returned safely.

Unlike kidnappings and hostage taking in Central America for example, where the return of victims can mean small ransoms of $50,000 or less, whether there is a kidnap and ransom insurance policy or not, pirates that commandeer large ships know there is a lot more they can get from deep pockets, and often set ransom money at $3,000,000 or more.

The navy seal operation against the Maersk ship Alabama in 2009 will hopefully help to deter at least some piracy, but with many pirates collecting millions of dollars and the success rate better than robbing a 7-11, incidents will increase.

If Pirates had better boats, it would be much worse

We have not heard very much about the Somali pirates in the news recently and the reason for their lack of kidnap and ransom activity is because of poor weather and monsoon season.  The boats they use are so bad, that any sort of high seas and storm activity can send the boat to the bottom of the ocean. 

However, the bad news regarding the maritime and shipping kidnap and cargo seizure risk off the Somali coast in the Gulf of Aden is that the weather is improving and an increase in attacks is expected soon. 

Insurance products are being developed in the London market to help ship owners and shipping companies deal with the financial risk of the pirates, and they are not  just limited to Somalia.  Many are adopting or revising old marine kidnap and ransom polices to adjust coverage levels and add new coverage such as cargo special protection / special cargo protection that would indemnify shipping companies in the even cargo does not find it’s destination because of a pirate related incident. 

All shipping companies are advised to make sure their marine k&r polices are completely up to date.