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Red Sea attacks see war risk insurance rates edge higher

War risk insurance premiums were raised slightly on Monday December 4th after three commercial vessels were attacked in the area on Sunday, reported Reuters, citing unnamed insurance sources.

Jakob Larsen, head of maritime safety & security with shipping association BIMCO, said that “it has now become clear the Houthis will attack anything at sea with links to Israel or Israelis, regardless of how feeble the links may be, and regardless of the potential for collateral damage to non-Israelis, for example crew members”.
Israeli military spokesperson Rear Admiral Daniel Hagari said the two ships cited by the Houthis had no connection to Israel.

Larsen said the industry would welcome a strengthened naval presence in the area. “Faced with a threat from military formations such as the Houthis, merchant ships rely on protection from naval units,” he said, adding that “there is little a merchant ship can do to protect itself against weapons of war. Re-routing away from the area is a valid consideration, especially for ships at heightened risk.”

Israel-based container line Zim said last week that it would be diverting some of its vessels away from the area, meaning longer journey times, as a temporary measure.

Insurance industry sources said that war risk premiums had stayed firm on Monday at between 0.05% to 0.1% of the value of a ship. That was up from around an estimated 0.03% last week.
Corey Ranslem, CEO of British maritime risk advisory and security company Dryad Global, said that transportation costs in the region were expected to rise further. “The escalation in insurance premiums will contribute to higher costs. Additionally, the increase in perceived risk may lead to a significant number of vessels opting to by-pass the region altogether, preferring longer routes such as circumnavigating the Horn of Africa.”

The Bahamas delegation told an already scheduled assembly session of the UN shipping agency in London on Monday that what was emerging was a “deliberate attack on international shipping” in a critical region. Some of the attacked vessels in recent weeks have sailed under the Bahamian flag.

Source Insurance Marine News 6th December 2023

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