Boat insurers poised to raise rates after Red Sea attacks By Reuters

By Jonathan Saul LONDON (Reuters) – Insurers are poised to increase the cost of providing cover for merchant ships through the Red Sea after a series of incidents that have affected ships in Saudi Arabian waters, sources said. industry. The possibility of further attacks on commercial shipping that transports oil and commodities via these waterways is increasing after the outgoing US administration’s decision to designate the Iranian-aligned Houthi movement from Yemen as a foreign terrorist organization. “We are seeing an increase in rates for ships calling at Red Sea ports due to concerns about the risk of attack by militia groups, whereas previously this was an issue of greater concern in the Arabian Gulf,” said Mike Ingham of Gallagher Insurance Broker. “This will affect ships traveling to Red Sea ports, such as Jeddah.” Each ship requires various forms of insurance, including annual war risk coverage, as well as an additional “default” premium when entering high-risk areas. These separate premiums are calculated based on the value of the boat or hull over a seven day period. Default rates have climbed to around 0.015% of insurance costs from around 0.012% in late December, which is equivalent to tens of thousands of dollars for a seven-day trip, according to market estimates. “The real debate is on the Red Sea side after the explosive ordnance incidents. Everyone is watching what happens next,” said a war underwriter. Saudi Arabia said last month that a tanker anchored in Jeddah port was hit by a ship loaded with explosives in what it called a terrorist attack. This followed another incident at another Saudi terminal in the Red Sea, where a tanker was damaged by an explosion. The US Maritime Administration warned seafarers last week that “intensifying military activity and increasing political tensions in this region continue to pose serious threats to commercial vessels.” The Red Sea is one of the world’s busiest shipping lanes leading to the Suez Canal, with thousands of annual transits through the Bab al-Mandab waterway at its southern end. There are broader tensions following Iran’s seizure last week of a South Korean tanker further out in the Strait of Hormuz.

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