So I need a little bit of some legal/mercantile help. I'm crafting a story in a fantasy world where piracy is a ubiquitous practice and constant fear for sea travelers. Would it be possible for certain enterprising individuals to take advantage of this and commit insurance fraud by hiring "pirates" for a staged hijacking of an insured ship that they own? What do I need to understand about maritime insurance in order for it to be something that a person could feasibly get away with (and profit), if it's even possible in the first place? For a frame of reference, the era is similar to that of the "Golden Age of Piracy" during the 1600s & early 1700s and the maritime and trade laws reflect this time period.
Generally speaking, yes. There are a number of complicating factors.
- Lloyds was founded in this timeframe. Note that insurance rates would reflect the perceived risk, so after paying the insurance and the fake pirates there might not be all that much left for profit.
- The problem of selling the loot is simplified if the fake pirates can go to a genuine Tortuga. What do the real pirates think about the fakes? They might consider this piracy by arrangement no different from any other job with inside information.
- Also, insurers and governments would take a dim view on this activity, and pirates are greedy criminals. How would the "entrepeneur" prevent blackmail from the hired muscle?
- Last but not least, unless the entire complement of both ships is in on the ruse, accidents can happen. A terrified merchant fires a brace of pistols. A desperate merchant blows the powder room rather than go into captivity.
The first merchant with this "clever" idea would make a tidy profit. When it becomes common, the costs of evading punishment will rise.