With piracy attacks on the rise, especially in the Gulf of Aden off the East coast of Somalia, the insurance industry is seeing an increase in requests for specialist kidnap and ransom insurance. These attacks are also becoming more violent, and resolutions are taking longer to negotiate, all of which increase the costs involved. Unfortunately, many ship owners have no choice but to move their cargo through these dangerous areas.
The surge in attacks has sent ship owners looking to their insurance brokers to find alternative insurance to cover the costs involved. While marine coverage normally covers the ransom involved, it may not cover additional costs involved with the process, such as the fees for negotiators or the fees for security individuals that must deliver the ransom. These types of fees are often more than the ransom itself.
In addition, many insurers are increasing premiums in connection with insurance covering the cargo moved through these areas. News reports state that in some instances premiums have increased by 100%.