War Risk Insurance Rates Increase Due to Attacks on Ships in the Red Sea

A series of attacks in Middle Eastern waters have occurred following a war between Israel and Hamas on October 7th. The U.S. military reported three commercial vessels coming under attack in international waters in the southern Red Sea. Yemen’s Iran-backed Houthi group claimed responsibility for drone and missile attacks on what they believed were two Israeli vessels.

According to Jakob Larsen, head of maritime safety and security with shipping association BIMCO, the Houthis have no qualms about attacking anything at sea with links to Israel, regardless of the potential for collateral damage to non-Israelis. Israeli military spokesperson Rear Admiral Daniel Hagari stated that the ships cited by the Houthis had no connection to Israel. The threat from military formations, such as the Houthis, has prompted the shipping industry to request heightened naval presence in the area for protection.

The attacks have already resulted in shipping companies, such as Israeli container line Zim, diverting some of their vessels away from the area, leading to longer journey times. The London insurance market has listed the southern Red Sea as a high-risk area, resulting in ships needing to pay additional insurance premiums. Moreover, there will likely be a significant increase in shipping costs and inconvenience as many vessels may opt to bypass the region altogether, such as circumnavigating the Horn of Africa. The U.S. military has pledged to coordinate with international allies and partners in evaluating the situation while the Bahamas delegation has expressed concern over the deliberate attack on international shipping in the region.

Source .