premium due to higher risk in Gulf of Aden
SHIPPING companies may have to pay
higher premiums for their vessels plying in the pirate-infested
areas in the Gulf of Aden and along the east coast of Africa.
Marine insurance underwriters in
London said the enhanced risk in the area would prompt an increase
So far this year, pirates have
hijacked about 39 vessels in the Gulf of Aden, with the latest being
the Sirius Star, the largest ship to be hijacked so far,
which was carrying two million barrels of crude oil.
Large ships usually have three
types of insurance policies namely hull policy, which covers
physical risks; protection and indemnity policy, which covers
matters concerning crew; and war risk policy, which covers acts of
terrorism including piracy.
The war risk policy has a clause
that requires extra premium charges for ship plying dangerous areas
such as the Gulf of Aden.
MISC Bhd, which has also fallen
victim to piracy acts in the area, said it had not been charged any
additional premiums by its hull and war risk underwriters.
Two of its vessels, MT Bunga
Melati Dua and MT Bunga Melati Lima were hijacked in the
Gulf of Aden in August and were released after ransom was paid.
A company spokesperson told
StarBiz that underwriters generally charged additional premiums
by applying a certain agreed rate to the total loss value of the
vessel that transit either the Gulf of Aden or any other listed
areas falling under the war exclusion zone as defined by the Joint
War Committee (JWC).
JWC is a group of marine
underwriters based in London.
According to the spokesperson,
MISC’s ships were still plying within the safety corridor of the
Gulf of Aden, accompanied by Royal Malaysian Navy vessels.
This is because the alternative
route via the Cape of Good Hope will incur extra cost.
“Going by the Cape of Good Hope
means spending more fuel of about 30 to 35 tonnes per day for an
extra 12 days at least, not to mention all other consumable and
“Additionally, we also will loose
out on charter hire earnings for the extra days if the charterer
does not agree to the route.
“Also, to maintain the schedule
reliability of the service, an extra vessel needs to be injected
into the service if we opt for the alternative route. This will
increase the system cost by one more vessel,” he said.
In contrast, he said MISC would
save on fuel and other costs and would only have to pay
approximately US$180,000 per transit toll at the Suez.
“Risk-wise, with Somalian pirates
moving further down south, a journey via the east side of African
Continent through the Cape, will mean that the vessel is still
exposed to the Somali pirates and we also have to face the harsh
weather at the Cape,” he said.