Piracy attacks will be classified as a war risk, rather than a marine risk, according to new policy documents circulating in the market. The documents require shipowners to notify their insurer every time they enter dangerous waters, such as those off Indonesia, Borneo, Saudi Arabia and Nigeria.

The move by Lloyd’s comes as machinegun-toting pirates blew a hole in the side of a Bahamas-registered cruise ship 100 miles off the coast of Somalia last Saturday. The Seabourn Spirit, carrying 302 passengers, repelled its attackers with a sonic blast.

Neil Smith, manager of marine, aviation and transport at the Lloyd’s Market Association (LMA), said that the removal of piracy from marine insurance policies — where it has traditionally been covered as a risk to the ship’s hull — would help underwriters to price the piracy risk more accurately and to reduce the risk of legal wrangles. By covering piracy in war insurance policies, the attacks will be treated like those by terrorists, he said.

"There’s a growing feeling that, as recent attacks have shown, the type of piracy risk has moved on," Mr Smith said. "If you’ve got guys in combat gear with rocket-propelled grenade-launchers heading towards you, how do you know if they’re pirates or terrorists? It will help with arguments that might occur later on."

The LMA is responsible for issuing standard policy wordings to the Lloyd’s market. Underwriters will discuss the new piracy cover with policyholders and their insurance brokers before implementing the changes. Marine cover tends to allow ships to move freely around the world, while war insurance covers most parts of the world but requires policyholders to contact their insurer if they intend to trade in danger areas.

Mr Smith said it would not become apparent whether shipowners had curtailed their journeys owing to the new policies until most customers renewed their policies on January 1, next year.

This week Numast, the maritime union, called for the seas off Somalia to be declared a war zone. Numast also wants the UK Government to force shipowners to adopt security measures against piracy. Thirty crew members have been killed in attacks by pirates over the past year.

Dominic Armstrong, managing director of research and intelligence at Aegis, the risk management consultancy, said that there had been a boom in piracy since the Boxing Day tsunami, which wiped out many of the "man and boy" operations. Organised piracy gangs have since moved in.

"Only sophisticated operators can handle the banking that’s required for a multi- million dollar ransom. If you live in a hut, keeping a ship’s crew hostage would get tedious within a couple of days," he said. "It’s no longer a couple of guys with machetes. We’re talking about rocket-propelled grenades."

Mr Armstrong is an adviser to the Lloyd’s War Risk Committee. He said that the committee constantly updated its list of dangerous waters. Formerly risky areas such as Egypt, Yemen, Sri Lanka, Angola and Iran had been removed from the list, he said, while Thailiand, the Malacca Straits and Somalia were new additions. Balik Papan, the waters off Borneo, are the most dangerous in the world, according to the committee.

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