Fears of worsening attacks rush up insurance rates
Pirate attacks on vessels sailing off Somalia could get worse, pushing up insurance and shipping costs and possibly forcing companies to use longer sea routes, Reuters reports.
The Group of Eight powers said it was "seriously concerned" about the increasing threat.
"(The) piracy risk is likely to get worse before it gets better," said a report commissioned by Lloyd's.
"It's quite difficult to find vessels that will go through the Gulf of Aden these days," said a London-based shipbroker.
Marine insurance brokers said insurers were charging between 0.05% to 0.175% of the value of a ship per voyage in the Gulf of Aden versus zero to 0.05% in May 2008.
"Rates and charges may well escalate if the number of successful piracy attacks increases," said Paul Newton, head of hull and yacht underwriting in Britain with insurer Allianz Global Corporate & Speciality.
"The cost of keeping global trade routes open could result in a growing 'piracy tax' that will be felt by a wider range of businesses and consumers, already battered by the effects of recession," the Lloyd's report said.
