The number and scope of pirate attacks is increasing worldwide, particularly along Africa's coastline, prompting a local insurance expert to caution business owners and company executives not to underestimate the financial risk that they are putting their companies in by failing to correctly insure cargo.
Many companies are rerouting their cargo past the Cape of Good Hope, willingly increasing shipping time and expenditure, in the hopes that the cargo will reach its destination. However, this makes South Africa the next potential hot spot for pirates, making it vital for companies to ensure that they have adequate cover.
This week saw one of the highest ransoms ever paid when Somali pirates received a record $9-million for the release of the South Korean supertanker, Samho Dream.
Heidi Miller, marine manager at Lion of Africa Insurance says it's not only bulk oil that is at risk, as pirates will hijack R50-million yachts, as well as ships with various cargo containers because the ransom is more important to them than the contents.
Pirate attacks risk maritime trade, which accounts for 90 percent of global trade volume. In 2009, piracy hit a six-year high, with Somali gangs accounting for more than half of the 406 worldwide incidents.
Often the pirates don't even know what is on the ships.
However, Miller says if the ship owner refuses to pay the ransom, and the businessman's cargo is in one of the containers on that particular vessel, they can lose a great deal of money if the pirates decide to destroy or steal the cargo in the containers, and there is not adequate marine insurance in place.