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Every year 12 million people set off on cruise ship vacations expecting to experience nothing worse than a case of sunburn or maybe a little seasickness. It doesn't always work out that way.

Cruise ships carry an average of 2,000 passengers and 950 crew members. Sometimes some of those passengers disappear mysteriously. Others return from their dream vacations the victims of rape or robbery.

The FBI reports that 207 incidents were reported to the bureau by members of the Cruise Lines International Association from April 1, 2007, through Aug. 24, 2007. Those incidents included four missing U.S. nationals, 13 assaults with serious bodily injury, 41 sexual assaults and 13 thefts of items valued at more than $10,000.

A Web site run by the Sammamish, Wash.-based International Cruise Victims Association, maintains a list of cases of people who have disappeared from cruises or were victims of crimes on cruise ships.

Another Web site, Cruise Bruise, also maintains a list of passengers who have gone missing from cruise ships and chronicles a wide variety of other cruise ship incidents ranging from illnesses to assaults and shipwrecks.

"Any place you go is risky," says Charles Lipcon, a top maritime attorney and author of the book Unsafe on the High Seas--Your Guide to a Safer Cruise.

"There's always risk involved," Lipcon says. "But the real danger on cruise ships is people have the mistaken impression that there are no risks. They feel they are totally protected, so they let their guard down and don't use their common sense," he says.

Passengers do not expect anything to go wrong and believe any incident will be handled with their best interests at heart by the ship personnel and law enforcement authorities. But crime on cruise ships can be a murky area from a legal interpretation standpoint.

Most of the major cruise lines register their ships in foreign countries, such as Liberia and Panama, and sail in international waters, raising complicated jurisdictional issues.

This means that multiple jurisdictions could be involved, with none willing to take the lead or actually pursue an investigation. Cruise ship crimes can turn into a game of "hot potato," with none of the authorities in any of the jurisdictions wanting to take on the cases, Lipcon says.

And while cruise lines and their risk managers do not want any harm to come to their passengers, they also do not want lawsuits or bad publicity. This can set up an adversarial relationship between the ship's personnel and the victims and their families, which can hinder any criminal investigation.

A few high-profile incidents in recent years, as well as pressure from a victims' advocacy group, have put the issue of onboard crimes in the national spotlight.

In 2005, for instance, a 26-year-old Connecticut man, George Smith, disappeared while on his honeymoon on a cruise in the Mediterranean. Smith's disappearance prompted U.S. Rep. Christopher Shays, R-Conn., to hold hearings on cruise ship crime.

In 2004, Merrian Carver disappeared from a cruise to Alaska. Her father, Kendall Carver, president of the International Cruise Victims Association, says his 40-year-old daughter was not reported missing to the FBI by Royal Caribbean until five weeks after her cruise ended. She has not been found.

State and federal legislation meant to address some of the concerns about the problem of onboard safety is in motion.

The U.S. House of Representatives passed a bill and an amendment in April that would improve the transparency of the reporting of cruise ship crime statistics.

On April 1, 2007, after a March Congressional hearing on the topic, CLIA, the FBI and the U.S. Coast Guard implemented a voluntary agreement that called for CLIA members to phone the nearest FBI field office as soon as possible to report any incidents involving alleged violations of U.S. law.

The new legislation requires the Coast Guard to maintain a numerical accounting of missing persons and alleged crimes committed on cruise ships and to have the information available online. The amendment also requires cruise lines to link to this database on their public Web sites.

The bill, which also includes language calling for the Coast Guard to secure marine natural gas terminals against terrorist attack, has received a veto threat from President George W. Bush, but will now be at least considered by the U.S. Senate.

"The bottom line is, the crime statistics provided by the cruise industry are inaccurate and inadequate," Rep. Shays says. "This has got to change."

A New York congresswoman from across the aisle agrees.

"Every crime should be accounted for--no matter where or when it occurs," says U.S. Rep. Carolyn Maloney, D-N.Y., who along with Shays was one of the sponsors of the amendment. "Unfortunately, cruise ship crime too often goes overlooked, and consumers don't have access to information that could help keep them safe on vacation."

Another bill that would require the presence of a qualified ocean ranger (a marine engineer licensed by the U.S. Coast Guard) on board cruise ships sailing from California ports is moving forward through the California legislature.

The state Senate Public Safety Committee in April approved the legislation, which was introduced by state Sen. Joe Simitian (D-Palo Alto), who says the cruise industry was not adequately protecting passengers from crime nor complying with environmental laws.

"Congressional testimony, accounts in the press and industry statistics all suggest a serious public safety concern, and an industry response which has been too often wanting," he says. "The presence of qualified, objective and independent law enforcement personnel on cruise ships addresses those concerns."

Although cruise ships typically carry their own private security, Simitian says there is no recourse to a bona fide law enforcement official in the event of a crime aboard. "There's an inherent conflict of interest between the public relations goals of the employer and the public safety requirements of the passenger," Simitian says.

In addition, cruise lines are not really motivated to preserve evidence and are not equipped to handle criminal investigations on their own, according to some. "Cruise lines don't want anything bad coming out, and so they're not great at preserving evidence or finding perpetrators," Lipcon says.

"The people on board are not well prepared to handle crimes," he says.

Risk & Insurance® contacted the major cruises lines to talk about passenger safety and their risk management practices, but none were willing to talk. Carnival Cruise Lines, Norwegian and Princess Cruise Lines declined comment. Royal Caribbean did not respond to an e-mailed request.

CLIA declined comment, but noted that the U.S. House Committee on Coast Guard and Maritime Transportation held a hearing on cruise ship security practices and procedures in September 2007. Information on the topic of passenger safety also could be found on CLIA's Web site.

In his written testimony at the hearing, Gary M. Bald, senior vice president of global security for Royal Caribbean, discussed some of the measures the cruise line had taken to improve the safety and security of passengers.

Following the congressional hearing on cruise ship crime in March 2007, Bald said Royal Caribbean began a formalized process whereby the global security department and the risk management department at Royal Caribbean would conduct formal quarterly reviews of all shipboard incidents.

The cruise line also implemented a guest care checklist that will help ship officers attend to the emotional and practical needs of guests in case of an incident. It also implemented a formal "after-action process" at the conclusion of the internal handling of a shipboard incident involving a sexual assault or a "man-overboard incident."

Royal Caribbean also entered into an agreement with an outside contractor to supply former federal, state and local law enforcement investigative experts, who are on call to respond to certain shipboard incidents, such as man overboard or sexual assault incidents.

WATER EVERYWHERE

Because of the watery environment their crafts operate in, the risk management challenges facing cruise lines are unlike those of any other industry.

"It's a bit unique because you are talking about a hospitality business that's on water," says Leo Magrath, a principal and executive vice president at Towers Perrin's reinsurance intermediary business.

Cruise lines, hotels and restaurants all have to worry about slip-and-fall incidents. But on a cruise line, a slip and fall could easily turn into a fall overboard.

At a hotel, a crime can be immediately turned over to the local police. On a cruise ship in international waters, multiple law enforcement authorities may need to be called in and there could be a delay before investigators arrive.

Cruise lines have risk management departments that are as sophisticated as any in the hospitality industry, says Thomas Dean, Towers Perrin principal and senior vice president of the firm's reinsurance business. But they are under a lot of pressure to keep incident rates down because, if the ship is unable to set sail, it cannot take people aboard. A hotel, by comparison, could simply close a room or two and continue to operate.

Cruise lines also have a lot of reputational risk exposure. "It would be very easy if people perceive that cruising was unsafe to find other opportunities," says Magrath,

The federal crime reporting legislation approved by Congress in April will make information about crimes on cruise ships more available to the public, should it become law. While this may release important information about potential dangers, critics say it does little to help ensure investigations or prosecutions of negligence or criminal acts.

Because of the complicated jurisdictional issues involved, investigations into cruise ship crimes often go nowhere.

In his 30 years as a maritime attorney, Lipcon says he has never seen a prosecution of a cruise ship crime. Crimes may get reported, he says, but then nothing happens. "I think it basically is some form of anarchy on the ships," he says. "What I like to say is, 'It's open season on the high seas.' "

Indeed, Lipcon says he believes word has gotten out to the sexual predator network, and cruise ships have now become a target for these predators who have figured out that they can get away with a crime, with little risk of being caught or prosecuted.

The solution, Lipcon says, is not more laws, but more enforcement of the laws that are already on the books.

"There's already plenty of laws on the books to protect people," he says. "If they would just enforce the laws they have."

Multiple jurisdictions shouldn't be a problem, he says. "Three jurisdictions can come in and handle it, but what's happening is none handle it."

Although there may be no criminal investigation or prosecution of an incident, victims and their families can pursue civil lawsuits. To succeed, these lawsuits must be filed in the proper venue and within the one-year statute of limitations.

In spite of the publicity over cruise ship crime and missing persons incidents, there has not been a massive surge in passenger liability claims from cruise lines, says Ben Abraham, executive director of the marine division for Willis.

HIGHER PAYOUTS COMING

The liability insurance market, however, is concerned about cruise line risk, not because of any historical trend in claims, but because of a pending change that will set substantially higher payouts for passenger liabilities, Abraham says.

The 2002 Protocol to the 1974 Athens Convention increases the payouts for passenger liabilities, and that could mean an almost tenfold increase in exposure for the insurers, which are typically the P&I clubs, independent nonprofit mutual insurance companies. The protocol will come into force after 10 states have ratified it. At the moment only four have, Abraham says.

But the liability market sees the handwriting on the wall and has begun raising rates. In the case of the insurance market, underwriters are not so much concerned about crimes or lawsuits, but a catastrophe where many or all passengers could be lost at sea, Abraham says.

"The recent increase in limits of the Athens convention for passenger liability limitation led to the International Group of P&I Clubs buying a further $1 billion of cover in 2007, taking their overall limits to in excess of $3 billion," says Colin Sprott, chief underwriting officer, global marine & offshore energy, at XL Insurance and chairman of the Joint Liability Committee for the London insurance market.

"It is now apparent that the potential marine 'catastrophe' incident is one that is most likely to involve a cruise ship," he says.

"As ships get bigger and the number of passengers and, for that matter, crew on board is ever increasing, the insurance industry must concentrate on the prospect of a megaincident, which could easily wipe out several years premium income," Sprott says.

"If you take it one step further and look at the prospect of an incident involving two cruise ships, the consequences could be staggering," he says.

PATRICIA VOWINKEL lives in New Jersey.

June 1, 2008

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