Kidnap insurance costs up tenfold in Gulf of Aden

Kidnap insurance costs up tenfold in Gulf of Aden
LONDON, 9 April 2009 – Shipowners navigating the Gulf of Aden are seeing insurance premiums for kidnap and random (K&R) increase tenfold as piracy escalates, according to global insurance broker Aon Risk Services. This means shipowners could be paying USD30,000 premium for USD3 million of cover for one journey through this piracy hotspot. 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 hotspots. 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 enquiries for cover escalate as shipowners seek to protect their employees and businesses.”

Some 70% of shipowners are opting for localised 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.

Comments are closed.