The cost of piracy insurance has increased as much as 20-fold after attacks on shipping off the Horn of Africa doubled in the first quarter, insurance broker Marsh said.
‘Attacks on large commercial vessels such as the Sirius Star, a Saudi oil supertanker that was released in January, almost two months after it was hijacked with a cargo of 2 million barrels of oil, have spurred premiums and demand for coverage. Piracy “is a pretty challenging piece of risk to underwrite,” Marcus Baker, head of marine insurance at Marsh in London, said in a telephone interview. “These pirates are attacking up to 700 miles off shore.” The European Union extended its anti-piracy mission off the coast of Somalia by a year last week, warning of a “serious threat” to ships in the sea corridor that handles a tenth of the world’s trade. Armed gangs have seized at least 29 merchant ships this year and carried out 114 attacks, more than in all of 2008, according to the North Atlantic Treaty Organization. “We had ships that were quoted at 0.05 percent on their value for a trip through the Gulf of Aden in the middle of last year, and we have had other ships recently quoted at 0.1 percent for the same trip,” Baker said.