Last year about $1 million in ransom was paid by shipowners in the region. The average paid per kidnapping is estimated at $50,000. During the period 40 sailors were kidnapped in about 20 incidents in the strait and surrounding waters. Four were killed.Further, the LAT notes that the insurance companies may be taking harder line on coveraged in the are and demanding that additional 'war coverage" be purchased to cover operations in the Malacca Strait
Protection and indemnity clubs — the mutual associations that cover 90% of merchant shipping tonnage — are reviewing coverage, say experts. An insurer's circular given to the Financial Times suggests that owners of ships sailing through the strait should take out a "comprehensive war policy" to insure hull and cargoes, and a kidnapping and ransom policy.As usual, if you "follow the money," you might find the motivation behind some suggested actions to control the pirate problem in the Strait - no ship owner wants his profits cut by the cost of additional insurance or higher fees...
The document, dated April 29, from the London-run Shipowners' Mutual Protection and Indemnity Assn., advised that its coverage "does not extend to include the payment of ransom demands and/or any loss or damage to the vessel or loss of earnings etc during a piracy attack."
The association insures mostly smaller and specialist ships, the type most vulnerable to attack.
Charles Hume, chief executive officer designate, said the circular was a first draft and had not been sent. "The club is naturally sympathetic to any member facing a kidnap situation and will always try and assist in any way it can on a case-by-case basis," he said. "However, the club's rules which set out its written cover do not include cover for ransom payments."