Image
Icon

Directory

IconAppraisers and Valuers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDefensive Driver Training
IconInsurance Brokers - Alphabetical Listing
IconInsurance Brokers by Type of Product or Service Needed
IconInsurance Companies
IconInsurance Consultants
IconInsurance Tender Preparation, Evaluation and Adjudication
IconLightning Damage & Surge Protection Specialists
IconMedical Rescue
IconOmbud
IconOnline Quotes and Cover
IconPremium Financing
IconPublic Loss Adjustors
IconPublications
IconRating Agencies
IconRegulatory Authorities
IconRisk Finance
IconRisk Management
IconRisk Surveyors
IconSalvage Operators
IconStrategic Business Consulting for SMME's
IconTelephone Quotes
IconVehicle Accident Management
IconVehicle and Household Risk Inspection Services
IconVehicle Tracking
IconWellness Programs
Image
  Subscribe To »

Ship and cargo owners urged to protect themselves against major piracy risks

Published

2012

Thu

01

Mar

 

The recent piracy attack on the MV Free Goddess, a Greek-owned bulk carrier worth over $ 8 million, once again highlights the need for ship and cargo owners to safeguard both their assets and people through an effective risk management strategy.

 

The increasing number and scope of pirate attacks particularly along Africa’s coastline has become a multi-billion dollar problem costing various governments and the shipping industry up to $7 billion last (R52.7bn) a year according to a recent report by One Earth Future Foundation, a non-profit advocacy group. The study also showed that world governments are spending at least $1.3bn trying to control the problem, a figure dwarfed by shipping industry costs estimated at up to $5.5bn.

 

Adam Samie, CEO of Lion of Africa Insurance, says it is crucial for those operating in the marine industry to manage the financial risk of piracy and to reduce their potential exposure to liability. “Should a vessel be pirated, costs are incurred almost immediately. Prior to finalisation of ransom settlement, investigators, legal counsel, average adjusters etc. are brought in to assist with ransom negotiations, determining the value of the vessel and the cargo she carries as well as potential consequential risk to lives and the environment.

 

“When piracy occurs, it can take months before the pirates start with initial communications. Once it has been confirmed that a piracy has indeed occurred, the general practice thus far has been for the ship owner to declare a “General Average”. According to Samie, some settlements of ‘General Average’ have resulted in cargo owners having to pay more than 50% of the value of their cargo on the vessel. “This is a significant financial burden to bear, “he says.

 

Samie warns that for any business without adequate marine insurance cover in place, this kind of exposure can be potentially devastating.

 

Further costs may also include the cost of all 3rd parties involved, such as negotiators and average adjusters etc. Consequential losses and trade disruptions are also a huge risk factor. “A hostage situation can take many months to be resolved. This business interruption can be very costly to an organisation if they are not covered for it,” says Samie.

 

However, according to Samie there are solutions available in South Africa to reduce exposure to such risks. Some companies offer crisis management in situations where lives are involved, manning vessels to deter piracy through passive means and tracking movement of a vessel and its cargo. There are also companies who provide specialist training to crew who sail on dangerous waters.

 

Furthermore it is also essential that the vessel has safety precautions in place such as increasing security on board like antipiracy watch, barbed-wire fencing, all emergency numbers entered into a satellite phone and ensuring fire hoses are in place and charged for immediate use.

 

Standard marine insurance does cover piracy and it is possible to get a policy that covers both the cargo and the ship.  However, in South Africa, Samie says that companies typically only need to cover their cargo as it is transported by independent shipping companies.  These large ships are generally covered by Lloyds of London because of the substantial value of the hull.

 
Samie says another concern is that marine insurers don’t always fully understand the risks faced by companies transporting goods by sea. 


“It is therefore important that you find an insurer that takes into consideration all aspects of the risk and advises accordingly on things that can go wrong,” says Samie.

 
Source: Epic Communications (Pty) Ltd
 
« Back to previous page Print this page » |
 

Breaking News »

Cost control and convenience: Why Direct insurance makes sense for more consumers

By: Rory Judd, MiWay Head of Online Marketing As economic pressures rise, people increasingly seek out less costly ways to run their lives. That includes the insurance cover required for cars and other goods, ...
Read More »

  

More on the Health Insurance Draft Demarcation Laws

An article in Business Report quotes Steph Bester, of The Unlimited, a direct marketing company that offers health insurance and other financial services products as saying: “…should the draft regulations ...
Read More »

  

The importance of effective home alarm systems

      Christelle Fourie, Managing Director of MUA Insurance Acceptances         An online survey conducted by Crime Stats South Africa revealed ...
Read More »

  

Nigeria has the potential to become a major economic force in the coming decades - McKinsey report

The report finds that Nigeria has the potential to expand its economy by roughly 7. 1 percent per year through 2030 LAGOS, Nigeria: There is no disguising the challenges that Nigeria is facing. The world is ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Life »

Image

Retirement »

Image
Image
Image
Image
Image
Image
Advertise Here

From The Glossary »

Icon

Reciprocity:

An arrangement whereby reinsurances are placed one against another so that a ceding company will only place a share of its business with a reinsurer who is willing to provide a similar share of its own business. Reciprocity is normally confined to fire proportional business and is occasionally based on an equivalent profit exchange rather than on premium income.
More Definitions »

 
 
By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2014.
All Rights Reserved.
Icon

Advertise

  Icon

eZine

  Icon

Contact IG

Icon

Media Pack

  Icon

RSS Feeds