Demand for kidnap and ransom insurance is increasing among owners of ships that ply the Southeast Asia and Gulf of Aden shipping routes due to a spate of attacks on merchant vessels, according to several executives at the Sea Asia conference in Singapore recently.
Regional anti-piracy initiative Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) reported a total of 20 piracy and armed robbery incidents during the first quarter of 2017, with 15 actual and five attempted. This was a slight increase compared to 17 in the first quarter of 2016.
According to an executive with a kidnap and ransom (K&R) insurance background, there have been more inquiries about K&R insurance and these are translating into actual sales.
“Unlike the past, when many owners won’t follow up after an initial inquiry, our company is able to sell at least one K&R policy cover a month to companies whose ships move in the Sulu Sea,” the executive told Platts.
Due to the higher risks in the Sulu-Celebes region, premiums are higher in Southeast Asia. But this is not only due to the recent rise in pirate attacks.
“The size of the ships moving along Sulu [Sea] is small and they are easier to board,” for pirates, said an insurance executive.
In some instances, K&R insurance provides a complete coverage package, including negotiations with pirates and ransom payment with the help of crisis response consultants. Usually, pirates/kidnappers initial demands are very high, but these can be lowered through the help of crisis experts and negotiators. K&R cover is also necessary for on-shore crew to protect against illegal detention.
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