HK touted as risk service hub to tackle piracy
The growing menace of piracy on the high seas, including the Gulf of Aden and the Indian Ocean, could give Hong Kong the opportunity to develop as a special risk service and insurance hub for Asia.
Steve Vickers, a former senior detective who heads two risk-management companies, said Hong Kong, with insurers, financiers, a trusted legal system and fully convertible currency, already had the makings of becoming such a hub.
What was missing was the 'element of joined-up thinking' to make it possible, he said.
'The government needs encouragement to support and promote the special risk hub concept in a similar fashion to Hong Kong's arbitration hub status,' he said. 'To date, Hong Kong has not capitalised on our unique capabilities.'
Aside from maritime piracy, Vickers said special risks included kidnapping and ransom and product extortion and contamination.
He thought there had been an increase in extortion threats against companies producing food and other products in southern China, Taiwan and elsewhere.
Vickers said Asia's wealthy also preferred to sign kidnap and ransom insurance policies in Hong Kong rather than their own countries because levels of personal secrecy and security were higher.
'Regional players have historically been willing to purchase their legal, insurance and crisis response capabilities in Hong Kong,' Vickers said.
'These special risks require experience, cohesion and an integrated response involving risk and crisis response, insurance, public relations, legal and related areas.'
Vickers said 18 Hong Kong-registered ships were attacked by pirates last year, as were 40 Singapore-flagged ships, based on International Maritime Bureau figures. He pointed out that 16 ships managed by Hong Kong firms were hit by pirates last year, as were 54 vessels managed from Singapore and 23 from Japan.
While the focus has been on pirate attacks in the Gulf of Aden and Indian Ocean, Vickers said there had also been ship boardings and robberies in the South China Sea as ships sailed east of Singapore.
He thought the situation would get worse. The International Maritime Bureau had already reported 142 attacks worldwide in the first three months of the year, including 97 by Somali pirates compared with 35 in the same period last year.
A dry cargo ship managed by the Hong Kong subsidiary of China's largest shipping company added to these statistics last Thursday when it was boarded by pirates 450 nautical miles off Mumbai, India. The 24 crew on board the Cosco HK Shipping Co bulk carrier Full City issued a distress call after locking themselves in a secure room on the vessel.
An Indian navy patrol aircraft made low passes over the ship, which scared off the pirates to a waiting dhow being used as a mother ship. Three US and Turkish warships, including the guided-missile cruiser USS Bunker Hill, headed to the area and a boarding team from the cruiser destroyed weapons, a skiff, fuel and other equipment found on the dhow.
SaveOurSeafarers, a lobby organisation supported by maritime industry groups including shipowners and the International Transport Workers' Federation, estimated that more than 800 seafarers were being held hostage off the coast of Somalia.
The privately funded group Oceans Beyond Piracy estimated the global economic cost of piracy was between US$7 billion and US$12 billion. This included up to US$3.2 billion in additional insurance costs, ransom payments last year of US$268 million, the cost of naval anti-piracy operations and higher fuel costs as vessels travelled via the Cape of Good Hope to avoid pirate-infested waters further north.
Maritime industry groups, together with the military, have drawn up best-management guidelines for owners in case their ships are attacked, boarded and hijacked.
As part of its special risk hub role, Vickers thought Hong Kong could provide training and specialist guidance for shipowners and managers. Unless razor wire was properly wound round a ship's railings to prevent pirates boarding, it could easily be ripped off by attackers wielding a grappling hook tied on a long length of cord to a bucket thrown in the ocean to act as a sea anchor.
He questioned whether existing insurance cover was adequate and thought there was a need for specialist maritime kidnap and ransom insurance cover. 'An insurer that doesn't pay swiftly or a policy that is unclear or open to interpretation can lead to disaster in such circumstances,' Vickers said.
Hong Kong toll
18 Hong Kong-registered ships were attacked by pirates last year
The International Maritime Bureau puts the number of Hong Kong-managed ships hit by pirates last year at: 16