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The Pirates' Toll: High Stakes on the High Seas

Colleagues in the industry pooh-poohed Christodoulou's fears. "Don't worry about it. It's a few ragtag guys. Nothing's going to happen." They pointed out the minuscule odds of a ship getting hit. If twenty-some-thousand craft sail through Pirate Alley in a year, and a few dozen are hijacked, the result of the obvious math ought to ease any ship owner's mind. (Even considering the huge upsurge in Somalia-based piracy since 2008, the odds of capture remain microscopic. If the number of annual GOA-Suez transits are to be believed, in 2009, a ship had a 0.002% chance of getting hijacked.)

And yet, Christodoulou says, "There was just something in the pit of my stomach saying, 'You know what? I don't think so. Let me really look at this.' I studied every attack that had occurred within the last two years."

To that point in 2008, 57 ships had reported to the International Maritime Bureau (a group that monitors high-seas crime for the International Chamber of Commerce) that Somali pirates had attacked them; 38 had been hijacked.

Of those, perhaps a dozen were still anchored off the coast of Somalia, engines idle in a kind of pirate-induced doldrums, awaiting ransom deals as their owners negotiated with the pirate bands for their release.

Christodoulou took precautions, what he likes to call a "belt-and-suspenders approach." First, ISEC went all-in on insurance, paying up for every sort of policy on the market that promised to guarantee against piracy-induced losses. (Some of it purchased from Hiscox, the huge British underwriter, one of the largest syndicates at Lloyds' of London [pictured above].) He bought loss-of-hire insurance, to cover the income the Biscaglia wouldn't be earning should pirates hold the ship for who knows how many weeks. He bought a kidnap-and-ransom policy, new to the maritime insurance trade, previously the domain of the famous, the super-rich, and those with business to conduct in places like Colombia. (Some shippers consider K&R insurance unnecessary, since war risk premiums are thought to be enough to cover ransom payouts.) Total cost for the voyage's insurance: $50,000.

He hired security guards (three of them): $40,000. He armed them with a so-called long-range-acoustical device, the amplifiers that somehow beam ear-splitting noise directionally over thousands of feet and into the ears of pirates or rioters or protesters, who -- the manufacturer's marketing literature assures -- will then double over in skull-clutching anguish: $5,000. (But he didn't arm the guards or crew with actual arms. Putting guns aboard ships remains taboo in the merchant-shipping business, not because of any pacific worldview on the part of ship owners, but for fear of the liability-lawsuit nightmare should a firefight erupt between pirates and the crew and any seafarer-workers get hurt, or worse. This taboo, however, might be changing.)

He had reams of concertina wire wrapped around the perimeter of the Biscaglia's deck: $10,000.

Totting it all up, Christodoulou says ISEC spent about $100,000 to protect itself from pirates and any potential damages caused by them.
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