Indian Navy's guided missile destroyer INS Visakhapatnam responds as smoke rises from Marlin Luanda, merchant vessel, after the vessel was struck by a Houthi anti-ship missile, at the location given as Gulf of Aden, in this handout picture released January 27, 2024. @indiannavy via X/Handout via REUTERS
LONDON, April 16 (Reuters) – Howden has started offering war risk cargo insurance to cover vessels sailing through the Red Sea against drone and missile attacks as geopolitical tensions escalate in the region, the UK-based insurance broker told Reuters on Tuesday.
The cost of insuring a seven-day Red Sea voyage has risen by hundreds of thousands of dollars since Yemen’s Iran-aligned Houthis began attacking shipping in the area in November in a show of solidarity with Palestinians in Gaza.
Howden said the new product was the “first dedicated insurance coverage of its kind to protect cargo vessels within an active conflict zone, which encompasses the Bab al-Mandab Strait, the Red Sea, and the Indian Ocean.”
“The conflict in the Red Sea has presented a significant obstacle to clients with operations in the region. Vessels are seeking protection as they navigate this security hotspot,” Ellis Morley, associate director, cargo and commodities, with Howden, added.
The insurance has a 12-month term and offers cover of $50 million per vessel, Howden said.
Leading marine insurer Markel is one of the lead underwriters on the product, together with another player Navium as co-lead, Howden added.
“This cover was put in place to provide a competitive option for clients whose war cover had been canceled,” Morley said.
“As our facility grows, we have more of a scale of economy and the strategy is to keep our rating at the bottom end of what is available,” Morley added, referring to premiums but without giving specific figures.
Global shipping is also grappling with increased threats in the Strait of Hormuz on the other side of the Gulf peninsula.
Iran’s Revolutionary Guards seized a container ship in the strait on April 13 days after Tehran vowed to retaliate for a suspected Israeli strike on its consulate in Damascus on April 1. Iran had said it could close the crucial shipping route.
“We could see increasing restrictions on coverage available to clients operating in the Persian Gulf,” Morley said.
(Reporting by Jonathan SaulEditing by Mark Potter, Kirsten Donovan)
(c) Copyright Thomson Reuters 2024.
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