Irene SL: Damage claims rising faster than premiums
Pirates operating some 1,000 miles off the coast of Somalia, 350 nautical miles South East of Muscat hijacked IRENE SL with 266,000 tons of crude, haunting waters previously considered safe. Crease/gap between USN and EU NAVFOR? "These are worthwhile targets for the pirates, who are feeling their way forward," .
"We don't know how it will develop but the trend is toward an increasing number of pirate attacks,"
Brokers estimate sales of marine kidnap & ransom policies have risen to about $125 million a year since 2008, when the products were first developed in response to an upsurge in vessel seizures and ransom demands off the cost of Somalia. "Damage claims have been rising faster than premiums can be adjusted up to now," Berg said, warning that losses could be much greater and might involve damage to the environment in the event of a sinking.
With 40 naval warships now patrolling the Gulf of Aden and waters off East Africa, pirates are shifting their attention further afield, including towards the Strait of Hormuz, through which pass around 40 percent of the world's oil shipments by sea.
Ransom payments have shot up over the last five years and now average around $4.5 million TO $5 million per ship, from around $150,000 to $300,000 previously. Hostages now spend an average of four months in captivity, a month longer than before.
The economic cost of piracy has been estimated at $7 billion to $12 billion per year, with shippers facing rising insurance costs that threaten to boost commodity prices.
Munich Re's premiums in the transport segment total around 1 billion euros ($1.4 billion), of which only a fraction is piracy-related.