Marine insurance gaining attention due to EU sanctions
As marine insurance continues to grab attention in the world of insurance news – with interest being fueled by the political standoff between the European Union, the U.S., and Iran – one United Kingdom-based insurance broker believes there may be a way for shipping companies to attain affordable coverage despite sanctions. Iran is currently facing sanctions from the EU in regards to oil shipments. According to these sanctions, insurance companies would not be allowed to provide coverage for cargo ships that are transporting the country’s oil. These sanctions would have a profound impact on many businesses in the region and could disrupt the marine insurance industry.
Seacurus claims armed security may help companies save on insurance
Seacurus Ltd., a leading marine insurance broker based in the UK, believes that the insurance industry and shipping companies can fare well despite the potential effects of the EU sanctions. According to the insurer, insurance costs for vessels that are subject to acts of piracy can be reduced by 75% if these ships employ armed guards. Piracy has become quite successful recently, which has led to increased activity in the Indian Ocean, much of which comes from Somalia. According to reports from the European Union Naval Force, more than $16 million was paid by insurers for ransoms in 2011.
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Kidnap and ransom insurance could go a long way for shipping companies
Seacurus claims that employing as few as four armed guards can drop the cost of kidnap and ransom insurance by as much as $15,000 for large shipping vessels. For ships that transport crude oil, insurance costs could drop by as much as 60%. The insurer notes that few shipping companies purchase kidnap and ransom coverage, which is part of the reason why marine insurance has become so expensive.
Some insurers willing to sidestep EU sanction in order to continue doing business
Some insurance companies have shown willingness to conduct business for shipping companies despite sanctions from the EU, but such acts would likely be costly. Seacurus believes that financial losses can be mitigated if shipping companies purchased adequate coverage and hired armed security to protect cargo and personnel.