No easy answers on the rising tide of maritime threats

by Edwin Lampert

It is no exaggeration to say we live in interesting times. Trying to clarify and price the risk is challenging even for the industry’s most seasoned experts.

Head of shipowners at Willis Towers Watson, Simon Lockwood is unconvinced whether even a heavy NATO naval presence can reliably shield commercial ships from aggression in the eastern Mediterranean.

The Strait of Hormuz also preoccupies Mr Lockwood as a potential flashpoint, with Iranian Revolutionary Guard units routinely harassing vulnerable tankers. He notes chilling “grave impacts for global trade” should Tehran ever move to close this vital chokepoint.

Added to that is the mismatch between countries bearing the financial and military burden of naval protection duties, and the huge number of ships registered for legal convenience in small nations with no such assets or mandates. This representation and free rider challenge complicates maritime security as well as accurately pricing insurance premiums. He also notes the growing complexity of tracking cross-border sanctions amid a fragmented global regulatory system, and factoring in unfolding threats such as drone attacks into often outdated insurance models.

Mr Lockwood sees the rising use of armed onboard security teams, although port restrictions and escalation risks during confrontations with sovereign naval assets may limit their impact. “It’s a really difficult situation to manage and police,” Mr Lockwood cautions. There are no easy fixes to deter state-backed interference, meaning the risk burden falls heavily on shipping companies, which are least able to mitigate it.  

With tensions rising, camouflaging measures reminiscent of the Iran-Iraq ‘Tanker Wars’ may resurface, Mr Lockwood suggests, although blackout navigation is harder in today’s digitally interconnected age. “It’s much more difficult now compared to the 1980s Tanker War era,” he argues, when “outright attacks sometimes occurred based merely on a vessel’s tenuous ownership or cargo associations.”  

Ultimately, insurers must support, not restrict, captains needing to take exceptional action to safeguard crews. “Pragmatic flexibility will have to prevail when assessing legal culpability, rather than rigid statutes,” he says.

The dangers now facing seafarers trouble him greatly from a moral perspective. Beyond financial impacts, acute trauma for detained crew members also needs addressing through mental health support and enhanced liability coverage.

Where regulatory regimes fail, Lockwood believes insurers should leverage commercial pressures to raise risk governance standards across the maritime sector. He also advocates clearer “exclusion zones” to contain volatility in flashpoint waters.  

“The vessels getting caught in the crossfire are civilian crews going about normal business,” says Mr Lockwood. He wants a specific IMO maritime security protocol explicitly prioritising safe passage rights for vessels not party to conflicts, arguing opportunistic states currently exploit uncertainty as “it’s often the fear of escalation, not actual confrontation risk, that gives them leverage.”

The hard truth is global shipping must strengthen resilience in navigating increasingly dangerous waters, but for now at least, Mr Lockwood does not see calmer seas on the horizon.

Source : rivieramm.com