Red Sea Houthi attacks strongly affecting war risk insurance premiums

Chamber of Shipping > Blog > News > International > Red Sea Houthi attacks strongly affecting war risk insurance premiums

War risk insurance costs for vessels transiting the Red Sea have significantly increased, some reaching 1% of hull value, due to heightened threats from Yemen’s Houthi faction. This hike is affecting shipping activity, with companies like Shell, BP, and Adnoc diverting routes to avoid risk. The cost impact is particularly severe for new Very Large Crude Carriers (VLCCs), potentially adding $1.3 million per trip. Shipowners, especially those with perceived Israeli, American, or British links, are finding it increasingly challenging to obtain insurance. Many are opting for longer, safer routes like circumnavigating Africa, adding substantial time and cost to voyages. The situation has led to higher freight costs and potential inflationary pressures due to delayed deliveries. The insurance market is adapting with more dynamic pricing and shorter quote terms, reflecting the escalated risks in the region.

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