Underwriters to raise rates after Red Sea ship bombing attacks
MARINE underwriters are expected to increased rates to provide coverage for merchant ships through the Red Sea after a series of attacks off Saudi Arabia, Reuters reports
19 January 2021 - 19:00
A tanker anchored at Jeddah was hit by an explosive-laden boat in what it called a terrorist attack. This followed a separate incident at another Saudi terminal on the Red Sea where a tanker was damaged by an explosion.
Industry sources said the possibility of more attacks on commercial shipping carrying oil and commodities through these waterways is growing after the US designated Yemen's Iran-aligned Houthi movement as a terrorist organisation.
'We are seeing increased rates for vessels making port calls in the Red Sea due to concerns over risk of attack by militia groups, whereas previously this was of an issue of more concern in the Arabian Gulf,' said Mike Ingham with insurance broker Gallagher. 'This will be impacting vessels travelling to Red Sea ports such as Jeddah.'
Every ship needs various forms of insurance, including annual war-risk cover as well as an additional 'breach' premium when entering high-risk areas. These separate premiums are calculated according to the value of the ship, or hull, for a seven-day period.
Breach rates have ticked up to around 0.015 per cent of insurance costs from about 0.012 per cent in late December, equating to tens of thousands of dollars for a seven-day voyage, according to market estimates.
'The real debate is on the Red Sea side after the incidents involving explosive devices. Everyone is watching what happens next,' one war underwriter said.
The US Maritime Administration warned seafarers last week that 'heightened military activity and increased political tensions in this region continue to pose serious threats to commercial vessels.'
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