Increase in attacks will lift premiums
Insurance broker Aon warns that premiums for kidnap and ransom will increase significantly in the following weeks and urged ship owners to seek quotes for cover now. The broker said quotes should be sought before an improvement in weather lures Somalian pirates back into the waters, as the increase in attacks could see premiums increase significantly.
The lull in Gulf of Aden pirate attacks during monsoon season means kidnap and ransom insurance rates for such risks have fallen by around 30%.
Clive Stoddart, head of Aon’s kidnap and ransom team, said: “We’re expecting a significant rise in piracy attacks when the south-western monsoon season ends. As such, insurance prices are likely to be on the cusp of turning upwards. Ship owners can benefit from fixing the cost of an annual or single transit kidnap and ransom policy now while rates are low. Underwriters are offering reduced premiums, up to 30%, for quick and unladen vessels – in other words, those that can more easily escape attack - but this will almost certainly be short lived.
“Ransom payments and the total expense of releasing a vessel from pirates can leave ship owners facing substantial expenses. Recovery of such sums under existing liability or hull insurance policies is subject to much uncertainty and can prove a lengthy process. Securing more appropriate insurance cover from the kidnap and ransom market will reimburse and cover reasonable costs.”
