Maritime piracy

On November 15, 2008, Somali pirates seized the tanker Sirius Star and its two million barrels of crude. The ship was released only in January 2009, against a ransom of about three million dollars. The Montego Bay convention defines piracy in international law as an act of violence committed for private ends, by the crew of one ship against another ship, on the high seas or outside the jurisdiction of any state. That narrow definition excludes attacks in territorial waters, classified as armed robbery at sea. To the victim the distinction makes no practical difference; it does matter for naval jurisdiction and for policy drafting. In insurance, piracy occupies an unstable place. The all risks cargo form covers it, since it is not excluded. The hull policy excludes it and sends it to war risks cover, so a single event can fall to two different markets depending on the interest insured. Dedicated policies handle ransoms: they reimburse the payment, the negotiator's fees and delivery costs. The payment itself runs up against sanctions regimes where the group is designated. The problem solved is an intermittent peril, geographically concentrated, whose frequency can swing within months in a way annual rating does not track.