39: The Insurance Market for Modern-Day Pirates

Tracy Alloway (0:07)

Hello, and welcome to another edition of Odd Lots. I'm Tracy Alloway, executive editor of Bloomberg Markets.

Joe Weisenthal (0:12)

And I'm Joe Weisenthal, managing editor at Bloomberg Markets.

Tracy Alloway (0:16)

So, Joe, what if I told you we were going to do a whole episode on insurance? You'd be excited, right?

Joe Weisenthal (0:24)

Really excited. I'd be totally thrilled. Yeah, of course, that'd be so exciting.

Tracy Alloway (0:29)

All right, I detect a touch of sarcasm. What if I told you we were going to do a show about insurance and pirates?

Joe Weisenthal (0:36)

So, if you told me that, I would say anything pirates-related is sure to explode of viral content all over the internet and people will be thrilled about this episode because I know how the internet loves pirates. And so I would say I'm very excited about that.

Tracy Alloway (0:52)

All right, everyone loves a good pirate story, right? And everyone loves a good pirates market story. So let me set the scene for us.

So last year, you might remember, Joe, there was a bunch of news coverage about a ship that sank. It was called the Thunder and it was illegally fishing. I think it was fishing for something called the Patagonian Toothfish. Do you remember that?

Joe Weisenthal (1:17)

I have to admit, I'm not sure if I remember that one specifically.

Tracy Alloway (1:19)

Okay, so the interesting thing about that ship was it was supposedly sunk by its crew. So it was sunk on purpose. It was being pursued by another ship because it was illegally fishing. And the really interesting thing is the Thunder actually was insured by someone, by quite a prominent London-based insurance company. And the owners of the vessel, the self-sunk vessel supposedly, ended up coming after the insurance company for compensation, which you might not expect, right? Like pirates essentially going to insurers to get compensation. Seems a bit weird.

Joe Weisenthal (1:55)

Yeah, you definitely wouldn't expect it for all kinds of reasons. I think one reason that jumps out at me is just a fascinating story is this intersection of something that seems rogue and outside the law and old timey with pirates and something like insurance, which I think of as being highly regulated and highly sort of this modern financial thing. And so the intersection of the two is pretty fascinating.

Tracy Alloway (2:19)

Exactly. So it turns out that insurance companies insuring illegal fishing boats is actually a lot more common than you would think. And we have someone here today who's going to be able to talk to us a lot more about it. She is Dana Miller. She's a marine scientist at the University of British Columbia. And she actually published a study just last month saying that illegal vessels appear to be insured almost or just as often as legal vessels.

Again, a very interesting dynamic that you wouldn't necessarily expect.

Dana, welcome to the show. Thanks for joining us.

Dana Miller (3:02)

Oh, yes.

Tracy Alloway (3:03)

Hi. So just to begin with, maybe you could walk us through your expertise in this subject, because in my mind, it's not often that marine scientists end up looking at the world of insurance.

Dana Miller (3:17)

Yeah, it's kind of an obscure topic, that's for sure.

Well, I generally focus on policy issues.

That's where my research has kind of led over the years. I should mention that I was previously a postdoctoral researcher at the University of British Columbia, and that's where I conducted this research. But presently, I'm actually working for a non-governmental mental organization, Oceana, and I'm taking this recent research project forward into a new stage. But yeah, I'm very broadly focused in my research interests, and it tends to be quite applied. So I look at different conservation problems in the marine environment, and I'm not limited to any one discipline. I kind of go out there, learn what I can about the problem, and find some tools and do some research to try to develop recommendations for solving that problem. So that's in a way what led me to the topic of insurance and illegal fishing.

Joe Weisenthal (4:19)

So just to put it all together, it actually makes a lot of sense that you would look at insurance markets from this sort of marine conservation standpoint, because the boats that are being insured, they're illegal fishing boats, they're using methods that are illegal, they're contributing to overfishing. And theoretically, if they're able to get insurance on that activity, then that is sort of a de facto subsidy that could harm ecology.

Dana Miller (4:49)

Yes, yeah, that's right. But we actually came to the topic of insurance because I guess we were looking for an innovative approach at tackling illegal fishing.