A joint war committee comprising underwriters from the Lloyd’s Market Association and International Underwriting Association on 8 January expanded large parts of northern Indian Ocean as a conflict zone, the eastern border of which extends to the west coast of India. This has raised insurance costs of cargo reaching or going out of the country’s western ports. India’s exporters and importers will also have to bear higher costs for transporting goods because of restricted availability of ships as many fleet owners may avoid using this route instead of paying higher premium, according to T.V. Shanbhag, group adviser to India’s biggest ship-broking firm, Mumbai-based Transocean Shipping Agency Pvt Ltd.
“Considering that there have been no (pirate) attacks reported for the last two months within 500 nautical miles (926km) from the Indian coast, after the Indian Navy has taken remedial measures, it is imperative that the eastern boundary of the war zone be reduced to an appropriate longitude,” M.M. Saggi, nautical adviser to the government of India, said in a 11 May statement to the maritime safety committee of the International Maritime Organization, a copy of which has reviewed by Mint. If the regulator reacts favourably to India’s request, the insurers’ committee is likely to follow suit and lower or do away with the risk premium.
The menace of Somali pirates operating out of the northern coast of Africa pushed insurers to declare the area a war zone in January 2009, which was then extended eastwards as the pirates deployed long-range ships to attack and hold vessels for ransom. India has also advocated a need for an anti-piracy force led by United Nations troops that would patrol the sea off the Somalian coast and other affected regions. “If blue berets have been accepted and utilised in enforcing peace on land, we see no reason why blue berets for blue waters should not be an acceptable concept,” Saggi said. “An UN-led naval force would provide a more equitable, efficient and better coordinated protection to all ships, notwithstanding their flag, nationality of the seafarers or cargo distribution.”