Maritime piracy drives demand for kidnap and ransom insurance

More shipowners are purchasing insurance to protect their companies and personnel from capture

Maritime piracy drives demand for kidnap and ransom insurance

Insurance News

By Gabriel Olano

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.

Related stories:
Piracy at its lowest in two decades, says IMB
Piracy in Asia down 65%
Malaysian oil tanker believed hijacked returns to port

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