Soaring war risk insurance rates underscore rising tensions

War risk insurance premiums for shipments to Israel have surged dramatically, now reaching levels up to three times higher than they were just a week ago, as the armed conflict between Israel and Iran entered its fifth day.

According to Reuters, the cost of a seven-day voyage to Israeli ports is currently being quoted between 0.7% and 1.0% of the ship’s value, compared to just 0.2% one week earlier.

While these premiums remain below the peak of over 2% recorded in November 2023 following Hamas’ attack and Israel’s subsequent invasion of Gaza, the current rates still translate to tens of thousands of dollars in additional costs per voyage.

Insurance pricing is highly variable and dependent on factors such as the cargo type, vessel ownership, and the specific Israeli port of call.

Israeli ports are playing a critical role during this crisis, especially as the country relies heavily on maritime trade for its imports.

The Mediterranean ports of Ashdod in the south and Haifa in the north, as well as the Red Sea port of Eilat, serve as key gateways. On June 16, the Bazan Group announced the shutdown of its Haifa oil refinery after its associated power station was damaged by an Iranian missile strike.

Despite this, all terminals at Haifa remain operational, and nearly 30 vessels, mostly general cargo ships, were reported anchored in Haifa Bay according to MarineTraffic data.

The rising risk profile of Israeli waters has made many shipping companies increasingly hesitant to send vessels to the region.

Overall, while Israeli ports are managing to maintain operations for the time being, the combination of increased insurance costs, missile threats, and political instability is contributing to a heightened state of uncertainty for maritime logistics in the Eastern Mediterranean.

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