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The cost of insuring vessels passing through the Red Sea has surged since Houthi militants resumed attacks on commercial vessels, threatening to disrupt global trade, according to the world’s largest insurance broker.
Premiums charged for war risks in the stretch of water between Africa and Asia rose to as much as 1 per cent of the overall value of a ship by Tuesday, from a maximum 0.4 per cent before Sunday’s attack on a Greek-owned cargo ship.
Marcus Baker, head of marine and cargo for Marsh McLennan, said this meant the cost of cover for a $100mn vessel had increased from about $300,000 per voyage to as much as $1mn.
The attack on the Magic Seas, a dry bulk carrier owned by Greece’s Stem Shipping, was followed on Monday by an assault on the Eternity C, a bulk carrier that sails under a Liberian flag.
“The dynamics [in shipping insurance prices] are stranger than I’ve seen before,” Baker told the Financial Times, noting how previous attacks had prompted ships to take a longer route by going around the Cape.
“There seems to have been a very quick escalation in activity from the Houthis. It is expected that these rates move further upwards if shipping continues to use the corridor for transit.”
The Red Sea is one of the world’s most important trade chokepoints and an escalations of attacks — in addition to raising insurance costs for commercial vessels — would risk higher oil prices and disruption to the flow of goods.
The attack on the Magic Seas was the first such assault by the Iran-backed Houthis since December. The militants said the ship had sunk after it was attacked with gunfire, rocket-propelled grenades and maritime drones.
A Houthi spokesperson said in a statement posted on X that the attack was in response to “repeated violations by the owning company [of the vessel] of the ban on entering the ports of occupied Palestine [Israel].”
Eternity C, which is operated by Cosmoship, a Greek ship manager, was attacked with sea drones and rocket-propelled grenades fired from manned speedboats, according to Reuters, which also reported that three seafarers were killed.
The Houthis have not claimed responsibility for that assault.
In response to Sunday’s assault on the Magic Seas, which Stem Shipping’s chief executive said had left the crew “terrified”, Israel announced that it had “forcefully” struck Houthi-linked targets, including the ports of Hodeidah, Al-Salif and Ras Isa and a power station.
Israel also hit the Galaxy Leader, a car-carrier attacked and seized in the first Houthi attack on merchant shipping in November 2023.
The Israel Defense Forces said in a post on X that the ship had been “fitted with a radar system to track international vessels for terror operations”.
