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Business News of Wednesday, 16 October 2013

Source: Citifmonline

Premium on marine insurance in Ghana to soar

Premiums on marine insurance in Ghana and neighboring countries are expected to shoot up as piracy increases in the Gulf of Guinea.

The Gulf of Guinea over the months has seen a growth in piracy cases and the area is now seen as one of the most dangerous bodies of water in the world due to attacks on oil tankers and other cargo vessels by pirates.

Industry players fear the development could disrupt shipping lanes that have existed for over 500 years permanently.

The development is expected to see insurance premiums rising further and this is expected to push up the price of shipping goods, potentially raising commodity prices.

Nigeria loses about $12 billion a year to piracy and other maritime setbacks.

Insurers are reluctant to disclose the size of marine K&R premiums or claims for fear that pirates will use the information to set their ransom demands.

However, a study in 2011 estimated that the total cost of insurance due to piracy was up to $3.2 billion annually.

Deputy Transport Minister, Joyce Bawa Montari says countries around the Gulf of Guinea must join forces to fight piracy to deal with the matter.

“With the shift of focus now being on piracy from the Gulf of Aden to the Gulf of Guinea it beholds on all nations bordering the Gulf to cooperate to make our waters safe and secure. The developments where we are referred to as a piracy prone zone is not an enviable one and we must do all we can to ensure that are waters are safe once more,” she said.

According to her, over the past few years, “it has been an uphill task to reduce the cost of doing business in and around our ports therefore we need not to get this unenviable position of being a piracy prone zone which I believe will ultimately increase the cost of doing business as our insurance premiums for carriers will likewise increase. We need to put in place physical structures to curb this act of lawlessness.”