Insurance giants profit from Somalia’s poverty

There are some pirates who don’t use firearms to seize vessels on the high seas. There are certain pirates who commit their acts of oceanic theft from thousands of miles away, in cool office buildings in Chicago and London.

Patrick G. Ryan is the founder and chairman of the Aon Corporation, the world’s largest “risk management services” conglomerate. He doesn’t wear an eye patch and has no hook in place of his hand, although he could afford one made of solid gold.

In addition to helping his corporation obtain a net income of $685 million in 2004, Ryan took some time off that year to hold a personal fundraiser for George W. Bush’s reelection campaign at his estate in Winnetka, Ill., where Laura Bush and many of Ryan’s closest friends enjoyed a lobster dinner. They never even bothered to pay the $80,000 the city asked for as reimbursement for the massive police protection the city provided for the event. (Chicago Tribune, Jan. 17, 2005) Though Ryan is a Republican and strong Bush supporter, he was made a member of President Barack Obama’s inaugural committee and is working to get the 2016 Olympics in Chicago. (thecaucus.blogs.nytimes.com, Nov. 25)

Ryan’s Aon Corporation, along with others in the insurance business, such as the London-based International Securities Solutions Inc., has taken advantage of the recent rise in so-called “Somali piracy” by astronomically raising insurance rates on ships traveling through the Indian Ocean.

Eleven percent of the world’s seaborne petroleum is carried in tankers through the Gulf of Aden, a location specifically targeted by “pirates” of Somali descent. (examiner.com, April 13) Even though the risk of a ship being seized in the Gulf of Aden has gone up only 1 percent, the folks at Aon Corporation and their associates in “risk management services” have raised the cost of insuring a vessel from an average of $900 to $9,000, according to military historian James F. Dunnigan. (strategypage.com, Oct. 18)

Presently, however, less than 10 percent of vessels in the Gulf of Aden even bother to be insured at all, as the costs have gone up so much. (time.com, April 20)

Aon rewarded for corporate crime

With maritime insurance profits going through the roof, Aon Corporation still felt it was necessary to cut the pensions of its British workers, some by as much as 50 percent. (timesonline.co.uk, April 8) A spokesman for Aon UK told the Times that this was necessary “to protect our business” and ensure that Aon can “emerge from the recession strong and successful.”

On Jan. 8, Aon Corporation received the largest fine ever given for financial crime in the history of the England. It was fined 5.25 million pounds for making $7 million worth of “suspicious payments” to unnamed sources abroad, without checking to make sure these firms were not involved in “corruption.” The fine was originally 7.5 million pounds, but Aon was rewarded for its “cooperation” with the investigation by a 30 percent cut in its fine. (ifaonline.co.uk, Jan. 9)

When interviewed by Time magazine, an executive at Cooper Gay, a British insurance giant making huge profits from the “piracy” off the coast of Somalia, was asked if some of the profits made could be used to “develop” Somalia and prevent the poverty that causes the starving people of Somalia to seize ships and take people for ransom. He responded by snorting, “It’s not down to insurance companies to promote peace in Somalia.” (time.com, April 20)

He should have said that actually the opposite is true. Dunnigan said that a 1,000 percent hike in insurance costs for vessels would be “modest.” (strategypage.com, Oct. 18) The fact that impoverished, starving people in Somalia are reduced to “piracy” in order to survive has made the folks in the insurance business richer than ever. If anything, they see it as their responsibility to make sure it continues.

Aon Corporation announced that its revenue for 2007 was $7.15 billion. But with insurance costs for those traveling across the Gulf of Aden going up 1,000 percent as Dunnigan estimated, Aon is bound to do even better in the coming months. Yet the company still found it necessary to reduce its British workers’ pensions to “protect” itself and be able to “re-emerge” in the “challenging conditions” they now face.

Is it ironic that a few years before Bush would bomb Somalia and kill thousands of innocent civilians, his spouse Laura was eating lobster at the home of a man who would use the impoverishment of Somalia as an opportunity to line his ever-hungry pockets?