Since early September, the cost of insuring ships transiting the Red Sea has more than doubled, reflecting heightened risks from attacks by Yemen’s Houthi rebels.
According to Reuters, insurance premiums for ships navigating the Red Sea have surged from 0.7% to as much as 2% of the vessel’s value, particularly following incidents like the attack on the Greek-operated Sounion tanker. Industry experts, such as Louise Nevill, UK CEO of marine, cargo & logistics at broker Marsh, note that many smaller insurers are increasingly hesitant to provide war coverage, with some outright refusing to underwrite policies, Reuters reports.
David Smith, head of marine at insurance broker McGill and Partners, stated that this is the first time he has seen underwriters simply decline to offer coverage, Reuters informs.
This trend reflects a broader caution among insurers, who are becoming more selective regarding vessels deemed likely targets for attacks. While some coverage remains available, rising costs and restricted options pose significant challenges for shipowners, Reuters concluded.
During the International Union of Marine Insurance (IUMI)’s 150th annual conference in Berlin, Ilias Tsakiris, General Manager of American Club Europe, CEO of Hellenic Hull, and Chair of IUMI’s Ocean Hull Committee, explored the changing risk landscape as a result of geopolitical tensions. “Underwriters are increasingly cautious when it comes to vessels with connections to high-risk regions,” he said. “Past experiences in conflict zones, particularly around the Red Sea, are playing a larger role in risk assessments.” He explained that sanctions and geopolitical strain had made insuring vessels with ties to countries like the US, UK, and Israel more complex.
