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%. Aon, the world’s leading insurance broker, is urging ship owners looking for kidnap cover 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 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.”
Aon’s kidnap and ransom and marine teams have combined expertise to offer ship owners the following additional coverage for acts of piracy that complement existing protection & indemnity, hull & machinery and war insurance:
- Kidnap and ransom insurance, which reimburses the ransom payment and associated expenses such as the ransom drop off and specialist consultancy fees
- Piracy loss of hire insurance for owners and charterers which indemnifies a ship owner for loss of charter income during a period of illegal seizure of the vessel
- Cargo special protection insurance to cover loss of market value of cargo that may occur during a period of illegal seizure.
These products are available on either an individual transit or annual basis, with any ransom sums typically reimbursed within five working days.
