Benfield Offers Sea Piracy Coverage Plan

Benfield Corporate Risk, brokerage said that, in response to the capture of a Saudi Arabian oil tanker by Somali pirates, it has produced a dedicated and exclusive Marine Ransom & Extortion policy.

The firm said the policy is effective worldwide, is AA security rated and offers limits up to $10 million per event and indemnifies the policyholder against kidnapping and extortion, lost ransom, and costs incurred resolving the situation.

Pirates, who captured the Saudi supertanker Sirius Star over the weekend off the coast of Kenya as it was transporting a cargo said to be worth $100 million, were reported today to have asked owners for a $25 million ransom.

Benfield said its policy has a unique marine wording and is designed to complement a policyholder's existing Protection & Indemnity, Hull & Machinery, and War covers, and includes immediate access to highly regarded crisis management and response.

Mark Cracknell, Marine Team Leader at Benfield Corporate Risk, said, “While the willingness of the conventional marine insurance markets to do what they can to assist in these circumstances is never in doubt, we have found that many of our customers are attracted by the certainty of an insurance product that has been specifically designed to create just that.” He noted that, “A significant number of the world's ship owners have some degree of exposure to the problem of piracy. In the absence in many cases of a realistic solution other than paying a ransom, ship owners can face a substantial unbudgeted out of pocket expense.”

Benfield noted that, according to the International Maritime Bureau (IMB), 2008 has seen 92 pirate attacks on vessels in the Gulf of Aden and the East coast of–36 of which have been successful hijackings. There are currently 14 vessels being held with 268 crew hostage. Between November 10 and 16 alone, there were 11 attacks in this region with three vessels hijacked and another four fired upon.

Somalia, Nigeria and Indonesia are currently ranked first, second and third in terms of acts of piracy in 2008. According to IMB figures, 199 incidents were reported in the first nine months of 2008–115 vessels were boarded, 31 vessels hijacked, and 23 vessels fired upon. Meanwhile, 581 crew members were taken hostage, nine were kidnapped, nine were killed and seven are missing–presumed dead.