Sums Don’t Add Up

Data from Lloyd’s List Intelligence is being used to reinforce criticism that insurance figures from Oceans Beyond Piracy’s latest report on the Human Cost of Maritime Piracy 2012 are incorrect.    Defining the Gulf of Guinea as Cape Lopez to Cape Palmas – a generous explanation that takes in the coastlines of nine countries – research conducted by Lloyd’s List Intelligence shows 7,606 vessels entered the region last year, far below the numbers which transit the Indian Ocean HRA.

A number of insurers have moved to dismiss the huge insurance figures cited in the widely publicised report on West African piracy. They have called the statistics ”overstated” and slammed them as,”not reflecting commercial reality”.

The report, The Human Cost of Maritime Piracy 2012, has been developed by the Oceans Beyond Piracy project of the One Earth Future Foundation, and has gained wide spread exposure – but the insurance industry has united in greeting the claims and the figures it quotes with scepticism.

Sources recognise that calculating the true insurance costs are an exceedingly difficult proposition – but that doesn’t mean that figures can simply be plucked from the air, guesstimated – or simply made up. According to the report $275m is spent annually on war-risk premiums and a further $83m-$125m in kidnap and ransom premiums for transits into West Africa. The total insurance cost for the Gulf of Guinea region is therefore estimated to have been between $423m-$437m in 2012.

The Lloyd’s Market Association claims the figures quoted for West Africa comfortably exceed the estimated global premium of $250m in this class, and underwriters claim to have “no idea” what those numbers represent.