THE expense of insuring vessels navigating the Red Sea has spiked once again this week, reflecting heightened attacks in the region that are compelling some ships to steer clear of this crucial waterway, reports Bloomberg News.
This underscores the imperative to secure an area pivotal to global trade.
Reports indicated that insurance coverage has now escalated to 0.5 per cent of a ship's hull value, as reported by three individuals within the market.
This marks a substantial surge from earlier this month when costs ranged from about 0.1 per cent to 0.2 per cent of the hull value.
In response to mounting attacks on the merchant fleet by Iran-backed Houthis, the US and its allies are establishing a new task force.
The heightened risks have prompted considerations of potential military strikes, although diplomatic efforts are the preferred approach, according to sources familiar with the matter.
War risk insurance, typically quoted as a percentage of the ship's value for the duration it operates in high-risk zones, has surged over tenfold since the escalation of attacks.
London insurers expanded the designated risky regions within the Red Sea, effectively broadening the scope for requiring war coverage.
Major container shipping lines, including AP Moller-Maersk, have announced a pause in shipments through the area.
Similarly, oil and gas giants BP Plc and Equinor ASA adopting a similar approach contributed to a rise in crude prices, heightening global inflation risks.
Many vessels are opting for a detour of thousands of miles around the tip of Africa as a strategic alternative.
'Both options of increased premiums and rerouting around Africa will see a knock-on effect on the price of goods,' said London Forum of Insurance Lawyers executive committee member Toby Vallance.
SeaNews Turkey
This underscores the imperative to secure an area pivotal to global trade.
Reports indicated that insurance coverage has now escalated to 0.5 per cent of a ship's hull value, as reported by three individuals within the market.
This marks a substantial surge from earlier this month when costs ranged from about 0.1 per cent to 0.2 per cent of the hull value.
In response to mounting attacks on the merchant fleet by Iran-backed Houthis, the US and its allies are establishing a new task force.
The heightened risks have prompted considerations of potential military strikes, although diplomatic efforts are the preferred approach, according to sources familiar with the matter.
War risk insurance, typically quoted as a percentage of the ship's value for the duration it operates in high-risk zones, has surged over tenfold since the escalation of attacks.
London insurers expanded the designated risky regions within the Red Sea, effectively broadening the scope for requiring war coverage.
Major container shipping lines, including AP Moller-Maersk, have announced a pause in shipments through the area.
Similarly, oil and gas giants BP Plc and Equinor ASA adopting a similar approach contributed to a rise in crude prices, heightening global inflation risks.
Many vessels are opting for a detour of thousands of miles around the tip of Africa as a strategic alternative.
'Both options of increased premiums and rerouting around Africa will see a knock-on effect on the price of goods,' said London Forum of Insurance Lawyers executive committee member Toby Vallance.
SeaNews Turkey
