The 0.6–1.0% war risk premium can be substantial, especially for enormous vessels valued over €100 million.
The Houthis have relentlessly attacked shipping in the Red Sea since November, a key maritime route for 12% of global trade.
The Iran-backed Houthis argue the attacks are in solidarity with Palestinians in Gaza during the Israel-Hamas conflict. Premiums for ships and their cargos have “increased significantly” following the Houthi attacks, according to Frederic Denefle, head of Garex, a French firm specialised in marine risk insurance.The Red Sea threat is unusual but not exceptional, according to Neil Roberts, head of marine and aviation at the Lloyd’s Market Association , which represents all underwriting businesses on the Lloyd’s of London insurance market.
Insurance providers can then review both the vessel and its voyage, and can demand an extra war premium on top of normal coverage.The LMA’s Joint War Committee gathers regularly to assess security risks to shipping worldwide. That can equate to a considerable sum when some of the enormous vessels are worth in excess of €100 million.