Maritime kidnap and ransom insurance growing
As the success rate goes up, the cost of marine kidnap and ransom insurance goes up as well
For many shipping companies operating in the Gulf of Aden (as well as 3 or 4 other regions around the globe) a marine kidnap and ransom insurance policy or maritime KnR policy is now an essential part of doing business in the region.
Last year, the pirates attacked over 110 ships in the Gulf of Aden region, and the pirates were able to capture about 40% of the ships targeted, an incredibly good percentage that will just inspire more maritime hijacking.
Kidnappers, with the Somali pirates being the most infamous, want to secure kidnap and ransom money for hostages and they totally ignore the millions of dollars of cargo these ships carry because they can’t move the product. Actually, they have no port that can even doc these massive ships let alone move thousands of pounds of cargo off the ship by crane.
Maritime and marine kidnap and ransom insurance policies, provided by certain syndicates of Lloyd’s of London for example, would pay a ransom benefit to pirates (for example, up to $3,000,000 or $5,000,000) and provide expert consultation to help get hostages returned safely.
Unlike kidnappings and hostage taking in Central America for example, where the return of victims can mean small ransoms of $50,000 or less, whether there is a kidnap and ransom insurance policy or not, pirates that commandeer large ships know there is a lot more they can get from deep pockets, and often set ransom money at $3,000,000 or more.
The navy seal operation against the Maersk ship Alabama in 2009 will hopefully help to deter at least some piracy, but with many pirates collecting millions of dollars and the success rate better than robbing a 7-11, incidents will increase.
