Kidnap And Ransom Case Study

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ii. Kidnap and Ransom (K&R) is insurance cover of crew members against ransom demands, but not the vessel or cargo.. Insurance giant Munich Re., estimates that K&R premiums increased 900% 2008 and 2009. iii. Cargo insurance covers goods transported by a ship. The excess premium on cargo transiting piracy regions is said to have also gone up. iv. Hull and machinery (H&M) insurance that covers physical damage to the ship, including grounding or damage from heavy seas, collision, sinking, fire, piracy, capsizing, being Stranded, and jettisoning cargo to save other property. This insurance premium is also gone up. c) Shipping networking and rerouting of fleets Because low speed ships stand a greater risk of pirate attack they avoid sailing through shorter risk route but instead take the longer safe voyage. Mbekeani and Ncube, (2011) reported that, the piracy situation in the Gulf of Aden led to the rerouting of tankers carrying oil from the Gulf of Aden to the Cape of Good Hope which is 50 kilometers south of Cape town (South Africa) thereby increasing fuel cost to around $3.5 billion annually.…show more content…
An average of 15 to 20 days is added to a cargo ship re-routing from Europe to the Far East. This extra duration of transit time reduces a vessel’s annual voyages by 17%. Europe's largest ship owner, AP Moller-Maersk, with 83 tankers, Norwegian Stolt tanker fleet, Odfjell shipping group (with a fleet of 90 tankers), and Frontline, one of the world's major oil carrier companies rerouted. Egypt’s Suez Canal suffered 20% decrease in its revenue collected from ships transiting in the past couple of years and the loss can be associated to rerouting as a result of pirate

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