SEPARATIST rebels and Islamic terrorists have turned Sri Lanka and Yemen into no-go areas for commercial vessels. As a result, insurance costs have risen sharply.

The two countries were included by Lloyd’s of London’s Joint War Committee on its list of “areas of perceived enhanced risks” last week, more than doubling in some cases the insurance cost of sending shipments into their ports.

Representatives of the Sri Lankan Government visited Lloyd’s of London underwriters last week to discuss concerns that the country’s inclusion on the list will damage trade. Clive Washbourn, head of the marine division at Beazley, the London insurer, said: “There was a full and frank discussion about the risk and what they’re doing from a security point of view.”

Mr Washbourn estimated that a large container ship worth $75 million (£40 million)would pay about 0.02 per cent of its worth, or $15,000, for an annual insurance policy, which would cover the vessel to make unlimited visits to the world’s safe ports for 12 months. However, the ship would have to pay the same amount for every single visit that it made to a port on the “enhanced risks” list, he said.

Also added to the list is the Strait of Malacca, which separates Sumatra from the Malay Peninsula, because of the rapid rise in piracy. Areas on the list are reviewed every four months by the committee in consultation with Aegis, the global security consultants.

Yemen and Sri Lanka had been removed from the list last only June after a diminution of hostilities.

Just over a week ago, nearly 70 people were killed in a sea battle between the Tamil Tigers and Sri Lankan government forces after the rebels attacked a naval transporter and sank another vessel.

The separatist ethnic conflict in Sri Lanka has claimed more than 60,000 lives since 1972. More than 200 people have been killed since the beginning of the month as a peace agreement brokered in 2002 failed.

The Tigers, who are fighting for a separate homeland for ethnic Tamils in the north and east of the island, were blacklisted yesterday by the European Union as terrorists, which some experts fear could lead to a civil war as the rebels decide that they have no choice but to escalate to full-scale war.

In Yemen, inclusion on the “enhanced risks” list was prompted by the escape from jail in February by 22 suspected or convicted al-Qaeda members, some of whom where involved in the attacks on the Limburg and the USS Cole.

In 2002 an explosive-laden dinghy rammed the Limburg, a tanker carrying 397,000 barrels of crude oil from Iran to Malaysia. She caught fire and leaked 90,000 barrels of oil into the Gulf of Aden, running up a $45 million damage bill. One of the tanker’s crew was killed and 12 others were injured.

Al-Qaeda claimed responsibility for the attack. The mastermind of the assault was believed also to be responsible for the bombing in 2000 of the USS Cole, an American warship, in Aden. The suicide-dinghy attack killed 17 American sailors and injured 39 others.

The recent additions to the “enhanced risks” list come after the decision by the war risk committee last November to make a significant change to its 318-year history as a marine insurer.

Piracy attacks were moved from being a marine risk to a war risk, to reflect the increased danger posed by heavily armed, financially astute pirates. Under new policy documents, shipowners were required to notify their insurer every time that they entered dangerous waters.

PIRATE THREAT

Other areas of enhanced risks include Iraq, Israel, Lebanon, Qatar, Saudi Arabia, Ivory Coast, Nigeria, Pakistan, Indonesia and Thailand

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