Cutthroat Capitalism: Somali Pirates and Insurers Share the Booty

Off of the coast of Somalia close to 1000 armed men troll the seas praying for a chance to score some booty. Since 2007 Somali piracy has caught the world's imagination and the number of hijacked boats has skyrocketed. But the pirates don't work in isolation. Piracy exists in Somalia not only because the nation is in a near constant state of revolution, but because the people charged with controlling piracy are actively helping to promote the underlying conditions that make hijacking ships so profitable. Not only have ransom payouts begun to routinely top $1 million (a Donald Trump-like fortune in Somalia), but whole anti-piracy industries have sprung up in response to piracy and created profitable business models of their own. Security contractors, insurance companies and maritime lawyers don't have any incentive to curtail the brigands when they reap millions in cash for every vessel they free.

In this month's issue of WIRED I've crunched the data and shown how the rise in ransom payouts in the last year has corresponded with a rise in insurance premiums, hijackings and shipping costs. And while hundreds of innocent crew members are held at gunpoint on their ships, the people who control the shipping industries have written it all off as a business expense.

Check out Cutthroat Capitalism here.