ABSTRACT
This chapter argues that special risk insurers have a powerful role in shaping the commercial practices of the shipping industry. Many shipowners insure their hulls at Lloyd’s of London, the world’s largest market for marine insurance. It is in the insurers’ interest to monitor the riskiness of sea areas and evaluate the risk management strategies adopted by their customers. When new risks emerge or existing risks escalate, insurers may require that security management adjust as a condition of insurance. Lloyd’s has created strong institutions to ensure that its syndicates do not compete on basic security principles and protocols. When insurance provision is highly concentrated, Lloyd’s can mandate industry-wide security standards where governments cannot. This is illustrated using Hijack-for-Ransom insurance as a case study.
