Insurers held to ransom by growing piracy

Piracy remains one of the biggest challenges facing marine insurers in 2012. According to Jason Freeman of Eikos Risk Applications, Somali pirates attacked a total of 237 ships during 2011. “While only 28 vessels were successfully hijacked, indicating that the number of successful attacks is decreasing, the attempts on vessels are increasing. Piracy in the Indian Ocean and elsewhere continues to be a major concern.” Freeman said the annual monetary cost of piracy to the international community was estimated between US$4.9 and US$8.3 billion. “The average ransom payment in March 2011 was $4m. That is double the figure of January 2010. At the same time 2011 also saw the highest ransom paid on record. In April, $13.5 million was paid to release the Irene SL, a large Crude Carrier carrying two million barrels of oil valued at $200 million,” he said. “But what is even more concerning is the increase in piracy along the west coast of Africa. In 2008 the attacks were isolated and mostly around the coast off Somalia. When one now looks at a map of the attacks, the Indian Ocean is a risk area along with the African west coast.” He said around $635 million in piracy-related insurance premiums was paid in 2011. “War Risk and Kidnap and Ransom (K&R) are the two primary forms of piracy-related insurance,” said Freeman.