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June 2006 47 impacts lives of merchant seamen and travelers as well as the multi-trillion dol- lar shipping industry and the global economies of the planet. It may only take one or two significant piracy events to trigger an uncontrolled apprehension beyond the $16-25 billion in annual losses now estimated (experts are unsure of the actual true costs due to the large number of unreported attacks). If left unchecked, it has the potential to cost hundreds of lives annually and hundreds of billions of dollars. If a cruise ship is successfully targeted, the losses would be much higher. From a February 8, 2006 report from an industry publication, "A string of piracy hot spots has emerged over the past 12 months and attacks are becom- ing more violent." The report continued "Iraq, Somalia and Vietnam have seen significant increases in the number of pirate attacks this year." In a January 19, 2006 Toronto Star article, Patrick Evans quotes Thomas Brown, a princi- pal of insurance intermediary Seacurus, Ltd., "But he said piracy is getting dead- lier. "Pirates realized it's actually easier to hold the humans who man these ships for ransom" Acknowledging the issue of Piracy is detrimental to the maritime transporta- tion system has been steadily growing, The Insurance Journal reported in its March 20, 2006 edition that Lloyd's has modified it policies and that a "set of clauses have been made available for use on marine hull and hull war policies held by shipowners to cover piracy risks. Use of these new clauses will clar- ify the situation for policyholders and insurers as piracy and terrorism will be covered by the same policy." The announcement said the "changes have been made to reflect the difficulty in dis- tinguishing between pirate and terrorist attacks as pirate attacks have become more violent and sophisticated. This has led to an increased risk of disputes over who should pay up when a ship is attacked in the event that the motive for the attack is unclear. The clauses, drawn up by the London Market's Joint Hull and Joint War Committees allow for the removal of piracy and some other simi- lar coverage from the hull policy, and their reallocation under the war policy." The Insurance Journal article further explained, "In the past, piracy has not been a substantial economic issue for insurers," it further explained. "While insurers were aware of the incidents, thankfully they have not led to major financial losses. The method of opera- tion of many of these gangs has been of general concern for some time, but the increasingly sophisticated methods and equipment used by these gangs have heightened fears that one of these inci- dents may lead to a major loss for under- writers." The maritime industry, the maritime governing bodies and their insurance providers are becoming cognizant they must respond to the rising level of vio- lence associated with piracy. First, it is important that the belief that losses due to piracy are an acceptable "cost of doing business" be challenged and questioned by members of the mar- itime transportation system world-wide. Secondly, nations in regions where piracy is prevalent need to develop coalitions to address the problem. The model for this concept is the collabora- tive initiative that has been undertaken in the vicinity of the Straits of Malacca where pirates have been very active for decades. The countries of Indonesia, Singapore, Malaysian and Thailand A new name – but continuous commitment to solutions driving your success Formerly ALSTOM Power Conversion, we are now Converteam, a stand-alone business. What has not changed is our technological expertise, our dedication to customer satisfaction, our capacity for innovation. Our worldwide workforce of 3,300 remains fully committed to one overriding goal: to bring you the best in technology with customised and competitive solutions for power conversion backed with a truly effective service organization in all our markets. Our expertise covers marine and offshore applications, process industries, oil and gas, renewable sources of energy, and more. powering your business into the future www.converteam.com Circle 221 on Reader Service Card 2006WorldYearbook2006WorldYearbook2006WorldYearbook2006WorldY MR JUNE2006 #6 (41-48).qxd 6/2/2006 11:54 AM Page 47
