Shoppers won t notice ship piracy insurance rise

Insurance costs have risen for merchant ships to transit the piracy-prone Gulf of Aden, but not hugely, and still represent only a fraction of the overall cost of the asset and cargo, marine hull insurers said on Monday.

They said extra transport costs feeding through to consumers on the high street would only represent a tiny part of the overall cost of the goods shipped.

Marine insurance brokers said that since the Gulf of Aden was added to a list of high risk areas prone to acts of war, strikes and terrorism in May, insurers were charging between zero and 0.05 percent of the value of the ship per voyage.

However, voyages to Somalia, a country that has been classed as a high risk area for years, are paying much higher additional premiums of between 5 and 10 percent per call, because of the added danger.

"Since the Saudi super tanker was taken rates have climbed a bit more for transiting the Gulf of Aden. We've heard up to 0.01 percent of hull value, but it really is all over the shop -- it's a market place," said one London-based marine insurance broker, who declined to be named on commercial grounds.

He said 0.01 percent on a $100 million dollar container ship carrying manufactured goods translated into an extra $100,000 per transit.

"You then divide that by the value of the cargo, because the cargo is paying you -- the cargo value could easily be twice the value of the ship -- you divide $100,000 by however many I-Pods you can cram into a container the difference to prices on the high street is next to nothing," the broker said.

Nevertheless insurance brokers contacted by Reuters said rates could still climb rapidly if a claim was submitted related to the Saudi oil tanker hijacked last week.

"If they blow the thing up and pour oil all over the Indian Ocean, clearly the claim will be a big figure...and rates will rise significantly," he said.

But marine brokers said that costs were still low compared with historic precedent.

"During the Iran-Iraq tanker war in the 1980s insurers were charging 25 percent (of the cost of the ship) per call to respective ports," another broker said.

"During the Second World War charges soared to 25 percent per transatlantic voyage and the reason was because 20 percent of the merchant fleet sank on every journey undertaken," he said.

Representatives of the London insurance market said there was no plan through the Joint War Committee (JWC) to extend the list of high risk areas prone to acts of war and terror.

Rumours are rife that the commitee may extend the list to include countries south beyond the Gulf of Aden and Somalia to waters off Kenya where the Saudi oil tanker was captured.

"We've got no plans to meet at the moment, but the nature of the JWC is that it can move very quickly if it needs to," Neil Smith of Lloyd's Market Association (LMA) told Reuters.

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Shoppers won t notice ship piracy insurance rise