On December 4, war risk insurance premiums for Red Sea voyages experienced an increase following attacks on three vessels in the area, raising concerns about heightened dangers for commercial shipping, according to maritime and insurance sources on Monday.
These incidents mark the latest in a series of attacks in Middle Eastern waters since the outbreak of a conflict between Israel and the Palestinian Islamist group Hamas on October 7.
The three commercial vessels came under attack in international waters in the southern Red Sea, as reported by the U.S. military on Sunday.
Yemen’s Iran-backed Houthi group claimed responsibility for drone and missile attacks, targeting what they claimed were two Israeli vessels in the area.
Jakob Larsen, head of maritime safety & security with shipping association BIMCO, expressed concerns, stating, “It has now become clear the Houthis will attack anything at sea with links to Israel or Israelis, regardless of how feeble the links may be, and regardless of the potential for collateral damage to non-Israelis, for example crew members.”
Israeli military spokesperson Rear Admiral Daniel Hagari denied the Houthis’ claims, asserting that the two ships mentioned had no connection to Israel. U.S. Central Command clarified that the three vessels were linked to 14 separate nations.
Larsen emphasized the industry’s need for a strengthened naval presence in the area, stating, “Faced with a threat from military formations such as the Houthis, merchant ships rely on protection from naval units.”
Israeli container line Zim announced last week that it was diverting some vessels away from the area, resulting in longer journey times as a temporary measure.
The London insurance market has classified the southern Red Sea as a high-risk area, requiring ships to notify their insurers when sailing through such regions and pay an additional premium, typically for a seven-day cover period.
Insurance industry sources noted that war risk premiums remained firm on Monday, ranging between 0.05% to 0.1% of the ship’s value, up from around 0.03% estimated last week before the attacks. This translates into tens of thousands of dollars in additional costs for a seven-day voyage.
Corey Ranslem, CEO of British maritime risk advisory and security company Dryad Global, predicted further rises in transportation costs in the region. He stated, “The escalation in insurance premiums will contribute to higher costs,” adding that the perceived risk increase might lead many vessels to bypass the region altogether, opting for longer routes such as circumnavigating the Horn of Africa.
The U.S. military announced on Sunday that it would “consider all appropriate responses in full coordination with its international allies and partners.”
Ships sailing under the Bahamas flag registry have been among those targeted in various attacks. The Bahamas delegation addressed an already scheduled assembly session of the U.N. shipping agency in London on Monday, characterizing the situation as a “deliberate attack on international shipping” in a critical region.
The delegation emphasized the collective impact, stating, “Whether you are directly involved in this aspect, all of us eventually pay for it – every nation that depends on international shipping.”
In January, shipping associations reduced risk assessments in the Indian Ocean, which leads into the Red Sea, after Somali piracy was brought under control.
Link To Original Article – https://www.reuters.com/world/middle-east/war-risk-insurance-rates-edge-up-after-surge-red-sea-ship-attacks-2023-12-04/
