Aon Urges Ship Owners to Buy K&R Now, as Pirates Renew Attacks

A bulletin from Aon’s London office urges ship owners looking for kidnap and ransom coverage to “seek quotes now before an improvement in weather lures Somalian pirates back into the waters,” following a lull in attacks during the monsoon season. Aon expects premiums for the coverage, which have fallen by around 30 percent recently, to start upwards again soon.

Clive Stoddart, head of Aon’s kidnap and ransom team, explained: “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.”

He added that underwriters are offering reduced premiums, up to 30 percent, “for quick and unladen vessels – in other words, those that can more easily escape attack – but this will almost certainly be short lived.”

Stoddart also warned that the ransom payments and related expenses, incurred in getting a vessel released once it has been seized are substantial. He indicated that the “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 said its 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,” the bulletin added.

Source: Aon – www.aon.com