Sea Transportation: Insurance Companies Form Private Navy

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January 10, 2011:  A major British insurer (Jardine Lloyd Thompson) is organizing a private armed escort service for ships operating off Somalia. Called the Convoy Escort Programme (CEP), the 18 small patrol boats will offer armed escort through the Gulf of Aden, and reduce overall security and insurance costs for ships using the service. It's all about money, as the insurance companies don't like the spiraling ransom costs, and especially the unpredictability of the pirates. While the insurance companies can pass the costs onto those who buy their insurance, the pirates could rapidly increase the number of ships they steal, and force the insurance companies to incur losses, not to mention the risk of more ships foregoing insurance and using increased shipboard security and armed guards.

The CEP is not a done deal yet. A country has to sign on to allow the patrol boats to fly their flag (and thus provide a national legal system to operate under). The patrol boats will carry heavy machine-guns (12.7mm/.50 cal), armed crews (all former military) and small boats to check suspected pirates. CEP will coordinate with the anti-piracy patrol, and let the larger warships spend more time pursuing the pirates that are now operating much farther from the Somali coast. Jardine Lloyd Thompson is also trying to get many of the other maritime insurance companies, plus some of the major shipping companies, to join in supporting CEP (including sharing start-up costs). If all the plans succeed, CEP could be operational later this year.

 

 


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