The insurance cost of shipping goods through the Red Sea has more than doubled in recent days after Yemen's Houthis attacked and sank two ships, killing at least four seafarers after months of calm, industry sources said on Thursday.
The Red Sea is a critical waterway for oil and commodities but traffic has dropped sharply since Houthi attacks off Yemen's coast began in November 2023 in what the Iran-aligned group said was in solidarity with Palestinians in the Gaza war.
War risk premiums have risen to around 0.7% of the value of a ship, from around 0.3% last week before the latest attacks took place, sources familiar with the matter said, with some underwriters pausing cover for some voyages.
Rates for a typical seven-day voyage period, which are set by individual underwriters, have been quoted this week at up to 1%, matching the peak level in 2024 when there were daily attacks. This adds hundreds of thousands of dollars in further costs for every shipment.
Insurance industry sources said underwriters would try to avoid covering any vessel with links with Israel, even if it was indirect.
"What we have seen in the last week appears to be ... a return to mid-2024 targeting criteria, which essentially involves any vessel with even a remote Israeli connection," said Munro Anderson, head of operations at marine war risk insurance specialist Vessel Protect. "With ambiguity comes risk."
