Marine insurer Gard recently held a Loss Prevention webinar that featured guest speakers from security consultancy Ambrey. The webinar focused on trends in piracy and war risks, with key recommendations for minimizing security threats to crew and property.
The panellists looked at the heightened security risk to ship and crew from several different perspectives – operational, commercial, legal, insurance and, importantly, from personal experience.
- Moderator Kunal Pathak Loss Prevention Manager – Asia, GARD
- Harry Pearce, Associate Director Risk Intelligence AMBREY
- Steven Harwood, Director, Crisis Management AMBREY
- Siddharth Mahajan, Loss Prevention Executive, GARD
- Puja Varaprasad, Senior Lawyer GARD
- Chris Lambe, Underwriter GARD.
Ambrey’s Harry Pearce provided an overview of global maritime crime and war risk perils, forecasting numbers for 2021 to be down against 2020, though with greater parity between regions and a higher relative share of incidents in Central and South America.
West Africa’s Gulf of Guinea was the focus of the brief, as the current hotspot for piracy, and specifically kidnap for ransom. Nigeria continued to dominate statistics, accounting for approximately half of the regional total each year. However, there had been increasing displacement of the threat, introducing greater complexity as to the right security response
Pearce cautioned that there were consistent and cyclical seasonal variations in the prevalence of the threat. He stressed the importance of retaining a sound intelligence picture.
The good news was that pirate efficacy had reduced; attacks in 2021 had been less successful than in the past. Further, he noted that there were a host of critical initiatives and naval deployments coming onstream in the near future.
Piracy and War Risk – two scenarios with insurance, charterparty and crew contract implications. The webinar addressed two scenarios – transiting through the Gulf of Guinea and transiting through a war risk area.
The second scenario focused on the attack of the BW Rhine by an explosive-laden remote-controlled skiff in Jeddah in 2020. Broadly speaking, piracy was considered a war risk and both hull and machinery property loss and P&I liability were insured by a war risk policy.
Gard underwriter Chris Lambe explained that the Joint War Committee designated certain geographical areas as listed areas and shipowners were required to notify their war risk underwriter of voyages in the listed areas as a condition of cover and for purposes of adjustment to premium.
Piracy outside of a listed area was still considered as covered by the war risk policy. Gard’s Defence lawyer Puja Varaprasad noted that different charterparties might define war risk more broadly than the JWC listed areas. Puja also noted that certain charterparty clauses, for example the BIMCO piracy clauses, included a provision whereby the Master and or the owners could refuse to proceed to an area if in the Master’s or the owner’s reasonable judgement, the area was dangerous to the vessel, cargo, crew or other persons on board due to actual or threatened reports of piracy.
Crew contracts might provide for additional compensation and other rights for sailing in designated high risk areas. For example, under the ITF International Bargaining Forum collective agreement, seafarers will receive additional monetary compensation when the vessel transits through a designated risk area, depending on whether the region is classified as a high risk area, warlike operations area or an extended risk zone. Further, the seafarer might also have a right to refuse sailing and be repatriated at the company’s expense.
As noted by Siddharth, designation of high risk areas differed between the IBF/ITF crew contracts and the Joint War Committee (JWC) listed areas. There was also a voluntary reporting area (VRA) which was administered by Marine Domain Awareness for Trade – Gulf of Guinea (MDAT-GoG). The West Africa VRA, unlike the reporting area off Somalia, does not contain a designated high risk area.
Threat awareness, training and preparation are key to managing risk
Although addressing security from different perspectives, all the panellists shared common key takeaways. Awareness of threats included up-to-date intelligence and required stakeholder collaboration. Security should not be treated as a peripheral task and owners had to ensure that their crews were well-informed, trained and equipped to face the threats when sailing through areas of heightened risk.
From the legal and insurance perspective, owners needed to engage with war insurers as early as possible and understand the nuances of different insurance covers.
Preparation also went to review of charterparty clauses including piracy, war and trading exclusions. And, finally, communication and transparency before an incident, during an incident and after an incident was essential. This included both internal communication between the departments responsible for fixing vessels and those responsible for crew, as well as between the management and the crew. Seafarers needed to both understand the risk and planned response, and also be given the opportunity to voice their concerns.
The webinar presentation was one hour followed by a 30-minute Q&A. The webinar was recorded and can be viewed via the link below.