Marine insurer Skuld has raised alarm at the resurgence of piracy in the Indian Ocean and warned of escalating claims in 2024, with additional concern about the 2025 claims environment.

After meeting in Hamilton last week, the member of the International Group of Protection and Indemnity Clubs reached out in a circular to clients.

The company said the resurgence in Somali piracy means a new era of risk in the Indian Ocean. In 2013, a World Bank report estimated that maritime piracy by Somalian pirates cost $18 billion a year.

After years of relative calm, coordinated attacks in the Somali Basin and western Indian Ocean since last month has included the dramatic hijacking of the Hellas Aphrodite on November 6, generating widespread concern across the maritime industry and insurance sector.

The use of mother ships have enabled pirates to project force far offshore, Skuld said, routinely 300 to 600 nautical miles from the Somali coast.

Hellas Aphrodite was boarded 560 nautical miles south-east of the town of Eyl. Pirates in a skiff, supported by a mother ship, fired machine guns and rocket-propelled grenades before boarding.

Pirates sailed the vessel, reportedly without armed security and with 24 crew on board, towards the Somali coast.

The ship’s manager has confirmed ongoing contact with the crew and is coordinating with authorities to ensure their safety.

While in the early part of policy year 2025, the overall frequency of insurance claims reported to the International Group showed some degree of improvement, Skuld said, the overall claims environment remained unsatisfactory, and an increase in claims activity is expected for the remainder of the policy year.

Marine insurers will soon be renegotiating mutual portfolio renewals and Skuld said they will continue to focus on individual membership performance.

However, the circular concluded: “At the recent board meeting in Bermuda, the challenges faced by Skuld and the industry were discussed, and the board have asked that Skuld secure an overall adjustment of 7.5 per cent on premium rates to ensure the continuous strong financial stability.

“Furthermore, all lower deductibles will be increased to minimum Skuld standard levels.

“Any adjustments to the International Group excess of loss reinsurance programme will be added separately.”

The circular reads: “The claims cost escalation in recent years is driven by large claims, and the lack of adequate premium to cater for the large claims element is concerning.

“This is observed on claims incurred within Skuld’s own retention, but perhaps more notably within the International Group pool layers.

“Adding on the increasing complexity of global trade and inflationary pressures, the conclusion is that there is insufficient premium to cater for all the eventualities the clubs are being exposed to and are expected to cover.

“Skuld’s growth in recent years and strong financial position help to absorb some of the volatility observed, and this emphasises the importance of continuing the growth ambitions going forward.”