Introduction:

Maritime piracy, a centuries-old challenge, continues to pose a threat to the shipping industry in world without Cameroon being an exemption because of its coastal nature where more than 90% of its external trade carried by sea said by the Cameroon National Port Authority. As vessels traverse international waters, the risk of piracy becomes a significant concern for ship-owners and operators. This article delves into the intricate relationship between maritime piracy and insurance, exploring how the industry copes with the evolving nature of sea-based threats in the Cameroonian context.

The Evolution of Maritime Piracy:

Historically confined to certain regions, modern piracy has expanded its reach, impacting major shipping routes worldwide. Pirates have become more sophisticated, employing advanced weaponry and technology to target vessels of varying sizes. This evolution has compelled the maritime industry  in Cameroon to reassess and adapt its risk management strategies.

Insurance and Maritime Piracy:

Insurance plays a crucial role in mitigating the financial impact of maritime piracy. Ship-owners in Cameroon and the world at large typically invest in a combination of insurance policies to protect against potential losses arising from piracy-related incidents. These policies may include Hull and Machinery (H&M) insurance, Kidnap and Ransom (K&R) insurance, and War Risk insurance.

1. Hull and Machinery (H&M) Insurance:

H&M insurance covers physical damage to the ship caused by piracy, such as hijackings, theft, or malicious damage. This insurance is essential for vessel owners seeking protection for their valuable assets, ensuring that repair or replacement costs are covered in the event of an attack.

2. Kidnap and Ransom (K&R) Insurance:

With the rise in kidnappings of crew members, K&R insurance has gained prominence. This specialized coverage addresses the human element of piracy, providing financial support for ransom payments, medical expenses, and related costs incurred during hostage situations. It is a crucial component in safeguarding the well-being of crew members.

3. War Risk Insurance:

Maritime piracy often occurs in regions designated as high-risk zones. War Risk insurance extends coverage beyond the scope of standard marine insurance, offering protection against acts of war, terrorism, and related perils. Ship-owners operating in piracy-prone areas commonly secure War Risk insurance to navigate these challenging waters with confidence.

4. Port Risk Insurance:

Port risk insurance provides coverage for vessels during port calls in high-risk areas. It protects against piracy attacks, theft, vandalism, and other risks associated with port operations. This coverage is particularly relevant for ships that frequently visit ports in piracy-prone regions.

Challenges and Innovations:

While insurance is a vital tool in managing piracy risks, challenges persist especially in the Cameroonian Industry. Which are as follows;

Non-payment of Claims

Often, claims go unpaid primarily due to two key reasons. Firstly, insurance companies may lack sufficient reserves to meet the demands of claims. While many attribute this situation to substantial outstanding amounts, it’s only partially accurate, as it cannot be the sole reason for not fulfilling indemnities. The second reason stems from the policyholder’s lack of awareness regarding the necessary procedures for filing a claim.

On a different note, insurers often place blame on carriers, specifically the judiciary, for their incapacity to handle claims adequately due to the absence of specialized magistrates in the matter. Additionally, Cameroon’s adherence to the 1924 Hague Rules Convention, favoring shipowners and carriers, contributes to delays in obtaining required certificates. Insurance companies may also withhold payments, citing the excuse that it is too late to file a claim against the carrier or another responsible party.

Lack of Information

The insufficient exchange of information between the assured and the insurer or broker, in cases involving intermediaries, is a glaring sign of communication breakdown. This communication gap sometimes leads to delays in completing various formalities, resulting in non-payment of claims. Proper guidance on what to do in the event of loss or damage should be provided either by the insurer or broker during contract conclusion, and reminders should be issued promptly when damage occurs.

It appears that once the premium is paid, the assured is left to navigate the situation independently, which should not be the case. A continuous relationship between the insurer or broker and the assured is essential while they conduct business together. Similarly, cooperation and communication between the broker and the insurer are crucial, especially when addressing the issue of dishonest brokers mishandling premiums. Lack of cooperation in the insurance sector in Cameroon exacerbates existing problems and complicates otherwise manageable situations.

Lack of Cooperation

Furthermore, the lack of cooperation extends to the relationship between insurers and brokers. Despite brokers representing the assured as intermediaries, strained relations often arise, particularly in cases involving untrustworthy brokers. This lack of cooperation poses a significant detriment to the insurance profession, considering the valuable role brokers play when fulfilling their responsibilities correctly.

Lastly, another aspect of deficient cooperation involves insurers and assured parties working together to prevent damage occurrences. Collaboration between insurers and assured individuals is crucial, especially in addressing issues like improper packaging leading to frequent damages. Finding solutions to such problems requires a cooperative effort between insurers and assured parties.

Technological advancements, such as satellite tracking and real-time risk assessment tools, have empowered insurers to proactively identify high-risk areas and adjust premiums accordingly. The industry’s ability to leverage data-driven insights enhances its capacity to respond effectively to the evolving landscape of maritime piracy.

Conclusion:

As maritime piracy remains an enduring challenge, the symbiotic relationship between the shipping industry and insurance in Cameroon continues to evolve. The adaptability of insurance solutions, coupled with innovative risk management practices, is essential for safeguarding vessels, crew members, and the overall stability of the maritime sector in the face of persistent threats at sea in the Cameroonian Industry.