Posted on 09 Apr 2009
In light of the most recent attack on a U.S. ship, Maersk Alabama, by pirates, and the subsequent capture of its captain, Richard Phillips, who is being held hostage, Aon Risk Services' report on kidnap and random (K&R) insurance couldn't be more timely. According to Aon, shipowners navigating the Gulf of Aden are seeing insurance premiums for K&R uncrease tenfold as piracy escalates. This means shipowners could be paying $30,000 premium for $3 million of cover for one journey through this piracy hot-spot. However, more are opting for cover to protect their employees as well as avoiding lengthy detours that threaten supply chains and increase petrol costs.
Specialist piracy policies for kidnap and ransom insurance can include cover for consultant and negotiator costs, ransom demands and medical care. These can be bought for individual transits or on an annual basis to bring down the cost.
Ashley Leszczuk from Aon’s crisis management team commented: “The cost of insurance is simply rising in correlation with the risk of kidnap in piracy hot-spots. Despite the presence of naval ships, the spate of piracy attacks over the last six months does not seem to be abating with increased civil unrest and pirates’ easy access to rocket launchers and AK47s. As such we’ve seen inquiries for cover escalate as shipowners seek to protect their employees and businesses.”
Some 70% of shipowners are opting for localized policies for the Gulf of Aden, the Gulf of Guinea stretching down to Somalia and the Straits of Malacca while a third of policies placed by Aon cover all locations worldwide.