Article

2005-08-25 Southeast Asia

"Catch 22" In Malacca Straits Over War Risk Rating

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Posted by Pappy 2005-08-25 00:11|| || Front Page|| [1 views since 2007-05-07] Top

#1 When a London-based advisory body for insurers designated the Straits of Melaka as a high-risk area for war and terrorism, it was met with strong reactions from the shipping industry who said it plain and simple -- was a misconception and at best, a result of incomplete intelligence.

NO, its based upon claims. That's how insurance companies operate. Lots of claims means rates go up.

The war-risk zone listing of the area would result in the increase of transportation costs as shippers would need to pay more for insurance cover.

See, its about money. Then if it is not dangerous, just travel without the rider for loss due to hostile acts.

Posted by Elmemble Ulaitch5567 2005-08-25 10:43|| 2005-08-25 10:43|| Front Page Top

#2 Lots of claims means rates go up.

That's not the whole story. Insurance rates went up generally after 9-11, not because claims went up, but because there was a re-assessment of risk in most cases.

Posted by Rafael 2005-08-25 16:20|| 2005-08-25 16:20|| Front Page Top

#3 That's a hellavua Catch, the best of all.

Posted by Shipman 2005-08-25 17:46|| 2005-08-25 17:46|| Front Page Top

#4 See, its about money. Then if it is not dangerous, just travel without the rider for loss due to hostile acts.

You make 'money' sound like it's a bad thing in international trade.

The key word is 'shipper'. Not necessarily same as a 'shipping company'.

Most shipments are financed or paid for by a letter of credit issued through a bank. The financier wants a guarantee of recovery of its funds if the cargo is lost or stolen. Hence insurance. If the cost of transport through the Straits becomes too high, the mode of transport may be changed (say, to air cargo), a new source found, or cargo is re-routed.

More importantly, the nations in and around the Straits have a great desire and need to develop their economies. If the cost of shipping materials gets too high, their economies suffer.

Posted by Pappy 2005-08-25 19:05|| 2005-08-25 19:05|| Front Page Top

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