With pirate raids in eastern Arabian Sea virtually stopped for the past two years, India has taken up a new battle against global insurance firms to get the piracy risk map redrawn to prevent major shipping traffic from getting uncomfortably closer to its exclusive economic zone that adversely affect Indian fishermen.
In December 2010, the Lloyd’s Market Association’s Joint War Committee, a group of underwriters based in London, had increased the scope of the piracy-infested region till 65 degree east longitude. The increased area was defined in the ‘Best Management Practices (BMP)’ industry document, which is strongly endorsed by multinational forum, Contact Group on Piracy off the Coast of Somalia (CGPCS).
On May 1, the CGPCS held its plenary meeting in New York, where India, along with Egypt and Oman, reiterated their demand for review of the High Risk Area, which it had raised in earlier meetings too.
“This time, we pointed out with a lot of facts and figures that there had been no incidents reported east of 65 degree since March 2012. And even that incident was 450 nautical miles from the Indian coast,” said a senior Ministry of External Affairs official.
This fight, according to the Indian Government, has become necessary to protect the interest of the Indian fishermen, whose livelihood gets hit by large cargo ships navigating these waters close to the Indian coast, apart from ensuring that sailing through the Arabian Sea does not mean heavy insurance premiums for the cargo vessel operators.
“The Enrica Lexie incident, which led to the shooting of two Indian fishermen, was a direct result,” asserted a senior government official. The Italians had even argued that the incident took place within the High Risk Area, to explain the skittishness of the marines who mistook the fishermen for pirates.
According to Indian officials, despite a lukewarm reception from other groups and global industry bodies, there had been a forward movement in the meeting in May that another ad-hoc meeting later this year will for the first time consider threat assessments by naval forces.
“This is a big step for us, as so far, any objective threat assessments done by naval forces will corroborate our position that there has been no incidents in recent years,” he said.
A possible compromise suggested by India is that while the piracy map may be shrunk till 65 degree longitude, “there could still be a provision for reporting of incidents till 78 degree.”
But, despite the concerted effort, Indian officials were aware that reducing the high risk area is an uphill battle with the resistance from the global insurance industry.
“There is a lot of opposition from the insurance industry groups, since a reduction in high risk area would mean lesser number of ships requiring the specific insurance that has high premium,” said the senior official.
As per the BMP, all ships transiting through the high risk area must buy the war risk insurance. Further, they could purchase an additional kidnap and ransom insurance, which covers ransom payment as well as other costs like hostage negotiations. A report was released last month on the Economic Cost of Somali piracy by a US-based non-profit group, Oceans Beyond Piracy which calculated that the additional spending on war risk and kidnap and risk insurance in 2012.