Insurance Companies Plan Private Navy Against Piracy

Major London-based maritime insurers as well as shipping companies have joined forces to create a private security force that would shield vessels traversing the Gulf of Aden and the Indian Oceans.

The plan, spearheaded by Jardine Lloyd Thompson Group (JLT), comes as a new piracy season opens and amid fears that Islamist forces on both sides of the Red Sea is muscling in on what has become a lucrative business.

British officials said they would consider the creation of a private maritime security force favorably provided it worked closely with the international naval force in the region. Industry sources say the plan is being welcomed by the British and other governments because the international force does not have the resources to fully patrol an area the size of the Indian Ocean and because the British Navy potentially faces severe budget cuts as part of the government’s austerity measures.

The private force would consist of 20 patrol boats carrying armed personnel that would escort vessel and act as a rapid response unit in protection of shipping in the Suez Canal and the Indian Ocean. Industry sources estimated that establishing the force would cost Euros 12 million, but would substantially reduce insurance costs that currently range per voyage from Euros 60,000 to 360,000 for an large oil tanker as well as ransom payments. Ransom payments and associated costs have cost insurance companies approximately Euros 230 million in the last two years.