Skyrocketing Insurance Costs for Red Sea Shipping Amid Houthi Attacks

The cost of insuring ships transiting the Red Sea has more than doubled since September due to increased risks from Yemen's Houthis. Several underwriters are pausing coverage as premiums rise. Attacks include drone and missile strikes, with notable incidents involving the Sounion tanker, exacerbating industry challenges.

The cost of insuring a ship through the Red Sea has more than doubled since the start of September due to increased attack risks from Yemen's Houthis, industry sources revealed.

The Iran-backed Houthis initiated drone and missile strikes on this waterway in November, citing solidarity with Palestinians in the Gaza conflict. Over 70 attacks have resulted in the sinking of two vessels, one seized ship, and three seafarer deaths. Sources, speaking anonymously, noted additional war risk premiums have surged to 2% from 0.7% of vessel value since September, following the attack on the Greek-operated Sounion tanker.

Louise Nevill, UK CEO, marine, cargo & logistics, at broker Marsh, confirmed premiums of up to 2% for a single Red Sea transit amidst fluctuating insurer interest. The Houthis threatened attacks on vessels linked to the UK, the U.S., or those visiting Israeli ports, expanding the scope of dangers and costs.

David Smith, head of marine with McGill and Partners, highlighted smaller insurers withdrawing from Red Sea war coverage for the first time. Cautious underwriters still offering cover are becoming more selective, leaving ships at higher risk struggling to find insurance.

The Sounion, struck on Aug. 21 and carrying about a million barrels of crude oil, avoided an oil spill while being towed, the EU naval mission stated. Its estimated $80 million value has yet to lead to claims. A consortium led by Brit provided the war insurance policy for the Sounion, including Antares, Iquw, Hamilton, Westfield, and Aspen, though comments were limited.

(With inputs from agencies.)