2009-09-04

By Editor, CIR

The lull in Gulf of Aden pirate attacks during monsoon season has resulted in a rate reduction of about 30% on kidnap and ransom cover, according to Aon. The broker is urging ship owners to seek quotes now before an improvement in weather lures Somalian pirates back into the waters, as the increase in attacks could see premiums increase significantly.

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 pricces 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."

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