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War underwriters are now charging ships linked to U.S, British and Israeli companies as much as 50% extra in war risk premiums to navigate the Red Sea, with other providers avoiding such business altogether due to the persistent threat of attacks by Yemen’s Houthis.
The Iran-aligned group claims it is acting in solidarity with Palsetinians as Israel's war in the Gaza Strip grinds on. Many companies have re-routed ships through southern Africa at significantly higher costs but others are still traveling through the Red Sea and Suez Canal. The war risk premiums being quoted for Red Sea voyages now hover around 1% of the value of a ship, up from around 0.7% previously, translating into hundreds of thousands of dollars of additional costs for a seven-day voyage.
“The ships that have so far had problems, almost all of them have some element of Israeli or U.S. or U.K. ownership in there somewhere,” Marcus Baker, global head of marine and cargo with Marsh, has told Business Insurance. Mr. Baker has reported that there’s “exclusionary language” being introduced for cover involving U.S., U.K. and Israeli interests.
The Yemeni rebels have continued attacks on commercial ships despite multiple counterstrikes by the U.S. and British navies. On Tuesday, two ships traveling in Middle East waters were targeted by the Houthi using ballistic missiles after the U.S. and Britain struck 36 Houthi targets in Yemen on Saturday. The militants, however, are sparing ships linked to countries closely allied with Iran. Ships are adding messages to their public ship tracking profiles showing they have no links to U.S., U.K. or Israeli companies.
“The apparent safe passage offered by Houthis to vessels flagged or owned by Russia, China — including Hong Kong--and Iran is designed to provide a degree of assurance to commercial markets associated with those countries,” Munro Anderson, head of operations at marine war risk and insurance specialist Vessel Protect, has told Business Insurance.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.