Marine and kidnap insurance up tenfold says Aon

Shipowners navigating the Gulf of Aden are seeing insurance premiums for kidnap and random (K&R) increase tenfold as piracy escalates, according to Aon.

This means shipowners could be paying $30,000 premium for $3m of cover for one journey.

Ashley Leszczuk from Aon’s crisis management team said: “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.

Reuters and Dow Jones reported a number of insurance industry figures saying marine insurance would rise as a result of the weekend’s US naval action off Somalia that saw three pirates killed.

"In general, the price is up five- to 10-fold from 18 months ago," said Peter Townsend, executive director for the marine practice group at Aon.