Red Sea insurance costs surge following Houthi attacks

The cost of insuring vessels transiting the Red Sea has more than doubled in recent days following two deadly attacks by Yemen’s Houthi rebels, as Reuters recorded.

According to industry sources, war risk premiums have climbed to approximately 0.7% of a vessel’s value, up from around 0.3% the previous week. In some cases, underwriters have paused coverage entirely for select voyages deemed too risky.

Rates for a typical seven-day voyage are now being quoted at up to 1%, matching the peak levels seen during mid-2024, when the region experienced daily attacks. These elevated premiums are adding hundreds of thousands of dollars in additional costs to each shipment.

“The recent attacks in the Red Sea have highlighted the need for caution when considering a transit,” said Neil Roberts, Head of Marine and Aviation at the Lloyd’s Market Association, which represents underwriting businesses at Lloyd’s of London.

Insurance industry insiders also report that underwriters are increasingly reluctant to provide cover for vessels with any links to Israel, even if indirect.

Munro Anderson, Head of Operations at Vessel Protect, a specialist in marine war risk insurance, commented that what has been spotted in the last week appears to be a return to mid-2024 targeting criteria, which essentially involves any vessel with even a remote Israeli connection, while he added that ambiguity creates risk, underscoring the growing caution among insurers operating in high-risk maritime corridors.

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