Collaboration between the commercial sector, government agencies and the military has been a “significant factor” in reducing pirate attacks off the coast of Somalia, the Lloyd’s Market Association (LMA) has told a committee of US senators.

The use of armed guards on vessels has helped deter attacks, but improvements on land through government interventions have been most significant in “pushing the statistics on Somalia in the right direction”, according to LMA Head of Underwriting Neil Smith.

While piracy is an age-old problem with a long history of insurance coverage, Somali pirates’ policy of kidnapping crews for ransom has been “a game-changer”, he told the House of Representatives’ subcommittee on coast guard and maritime transportation.

“This is a marine version of kidnap and ransom activity, rather than what we would traditionally regard as pirate activity.”

Somali piracy has raised “a number of longer-term questions” in the insurance community about how to approach traditional areas of cover, he says.

The co-operative approach used in Somalia could help address piracy in other locations, with attacks on oil vessels in the Gulf of Guinea an emerging problem, according to Mr Smith.

But “these incidents look, at this stage, to be a return to the more traditional model of piracy, with organised theft of portable goods from the ships and transhipment theft” of oil.

“The insurance sector is monitoring developments closely and it is a further example of why, even though the situation in Somalia looks to be improving, the international maritime community cannot afford to relax its efforts to reduce the threat of piracy.”