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Insuring ships against piracy is becoming very costly

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The cost of insuring ships against piracy has increased 1,900% since the start of the year, an insurance broker has revealed.

Marsh & McLennan blamed the 20-fold price rise on a spate of pirate attacks off the coasts of Somalia, Nigeria and Indonesia.

Attacks on vessels doubled during the first quarter of 2009, triggering extensive insurance claims and the hefty rise in premiums.

Pirates are becoming increasingly audacious, hijacking boats up to 700 miles offshore.

Markus Baker, head of marine insurance at Marsh & McLennan, said shipping firms that were paying 0.05% of the value of their goods for insurance premiums are now paying as much as 0.1%.

“Piracy is a pretty challenging piece of risk to underwrite,” Baker said.

Faster ships are cheaper to insure, Baker added, as they are more challenging for pirates to attack.

“Anything over 14 or 15 knots tends to be fast as far as the pirates are concerned,” he said.

Security costs have also increased, with the owners of tankers and container ships now spending up to $40,000 (£24,000) per passage on security guards.