Insurance coverage narrowed in the Red Sea: Premium increased to 3 percent on some flights Houthis' threats against Saudi-linked ships and tanker attacks
Insurance coverage narrowed in the Red Sea: Premium increased to 3 percent on some flights
Houthis' threats against Saudi-linked ships and tanker attacks have caused war risk insurance to jump again in the Red Sea. Indicative premiums for Southern Red Sea voyages exceed 1 percent of the ship value, while some Saudi-bound voyages charge up to 3 percent. Some insurers have begun to reduce coverage.
It has been reported that some marine insurers operating in the Lloyd's market have limited war risk coverage or re-evaluated policies for Saudi Arabia-bound cargoes and ships that have previously called at Saudi ports. It is stated that the measures especially affect the voyages in the south of the Red Sea and around Babülmandep.
According to information obtained by Reuters from industry sources, the war risk premium for southern Red Sea voyages increased from approximately 0.3 percent of the ship value last week to over 1 percent. Up to 3 percent was offered for some ships that called at Saudi ports close to Yemen, such as Jizan and Al Shuqaiq, or had significant Saudi connections. In more northern ports such as Jeddah and Yanbu, rates reportedly remained at around 0.1 percent.
A 3 percent premium means an additional cost of $3 million for a single risk period for a ship worth $100 million. Moreover, this amount does not include freight, fuel, personnel, port expenses and the loss of time caused by the route change.
The concrete reflection of the increased risk on operations was seen in the TORM INNOVATION tanker. The ship, which loaded approximately 500 thousand barrels of naphtha from Yanbu, decided to go to the Mediterranean via the Suez Canal and head towards Asia via Gibraltar and the Cape of Good Hope, instead of using Babülmandep on the way to Japan. It is stated that the route change may add approximately 30 days to the voyage.
TORM announced that the route decision was made based on crew safety. The extended voyage will not only increase fuel consumption; It will also affect the ship's next voyage schedule, cargo delivery date and available tanker capacity in the market.
The premium rates announced are not fixed tariffs valid for all ships. It is calculated separately for each voyage according to the ship's flag, owner, operator, past port calls, cargo origin, route, insurance value and security profile.
The question in the Red Sea is no longer just "can it be crossed or not?" not the question. Even if the ship passes, the conditions under which the insurer will stand behind it, who bears the war risk expense of the freight contract, and whether the crew will accept the voyage or not are also included in the same calculation.
Source: SeaNews Türkiye
