"War risk insurance premiums for ships have skyrocketed," Clarksons Securities analysts including Frode Morkedal said in a report. "Shipowners and charterers may find that rerouting around Africa is more cost-effective than incurring the combined costs of Suez Canal transit fees and insurance premiums." Credit: Sayed Hassan/Getty Images
(Bloomberg) — The cost of war-risk insurance for vessels sailing through the Red Sea is spiraling, adding a further potential impediment to trade passing through a waterway already labeled too dangerous for merchant shipping by the U.S. Navy.
Underwriters are now charging between 0.75% and 1% of the value of the ship to sail through the region, according to people familiar with the matter, jumping significantly since U.S. and U.K. airstrikes targeted the Houthi rebels in Yemen at the end of last week. Just a few weeks ago, quotes for cover were about one-tenth of that amount. The sharp increase runs the risk of making it too expensive to traverse the vital waterway.
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