War insurance rises as more ships on Red Sea firing line

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WAR risk insurance premiums for shipments passing through the Red Sea are increasing due to recent attacks on merchant vessels by Yemen’s Houthi forces, and the anticipation that ships with connections to the UK or US will be targeted, reports Reuters.

The well-equipped and trained Iran-aligned Houthis have conducted multiple attacks on ships in the Red Sea since November, and there are indications that they plan to extend their targets to include US ships.

Even prior to these recent attacks, the London insurance market had identified the southern Red Sea as a high-risk area.

Ships navigating through such areas are required to inform their insurers and pay an additional premium, traditionally covering a seven-day period.

According to industry sources in the insurance sector, war risk premiums have escalated to one per cent of a ship’s value, up from around 0.7 per cent the previous week, with various discounts applied by underwriters.

These sources further anticipate that rates will continue to rise in the coming period.