I like hypothetical scenarios. They make for interesting conversation and often work well at hammering a point home! With that in mind, how about this:
The Crew of the Blowfish (Yes “THE” Blowfish for all you non-mariners – she is my hypothetical ship) see a small fast moving vessel approaching their slow moving tanker just off the panhandle of Somalia. From experience and industry knowledge they know that these are pirates. So what do they do? Well, they are sailing a vessel full of crude oil moving at a comparably slow rate of knots and the pirates have Rocket Propelled Grenades. They stop of course and the pirates board the ship, make contact with the owners of The Blowfish and demand a significant ransome. The ransome figure, being poised at less than 1% of the value of the vessel, is referred to the vessels insurers and as all good insurers do, they take the lowest risk option and pay the ransome for the ships release. I dont know about you, but that sounds like easy money to me.
The insurer faced with a loss, has but one option, raise its premiums for ships passing Somalia. So when The Blowfishes sister, The Coral, insures it’s voyage, it pays a huge premium to do so or runs the risk of running without insurance (this would never happen, as this would invalidate nearly any contract for the transport of goods at sea). It is difficult to see how this transfer of funds from insurer to pirate does not constitute the criminal act of terrorist financing. We have swathes of legislation regulating the smallest of transactions in the financial services sector in the UK yet insurers are able to pay millions to gangs with boats. It’s mind blowing.
The insurance industry is financing these gangs and it’s outrageous that more isn’t done to clamp down on ransome payments. For every £1 spent on ransome payments, the insurance industry would be better 1) placing ex-military spec ops teams on board all insured vessels 2) investing in the redevelopment of lawless nations like Somalia. The problem is not that pirates exist, but that they exist and nothing is done to stop them by the very country that they reside in. If Somlia had a government and was not a lawless state, the international community would put exceptional pressure on the country to irradiate piracy. It may not solve the problem, but would do a whole lot to help!
However, for the time being, crime does pay!