Howden Offers War Risk Cargo Insurance Covering Red Sea Ships Against Drone & Missile Attacks

Howden, a UK-based insurance broker, has launched a new cargo war risk facility to safeguard vessels from drone and missile attacks by Yemeni rebels in the Red Sea region.

This unique insurance coverage protects up to US$50 million per insured vessel, with the maximum limit reaching US$150 million.

It is the first specific insurance solution designed to protect cargo vessels sailing through an active combat zone, including the Red Sea, Bab al Mandab Strait, and the Indian Ocean.

Implementing this policy demonstrates Howden’s commitment to using insurance to address complex risks, such as geopolitical instability while reducing pressure on global supply chains.

Howden has already enforced regulations across four continents in less than a month.

This action opens up a corridor for goods to pass through the Suez Canal and the Red Sea, providing an alternative to the longer route around the Cape of Good Hope.

This alternate path adds two weeks and 70% more emissions to a typical journey from the Far East to Europe.

Ellis Morley, Associate Director of Cargo and Commodities at Howden, emphasised the importance of this endeavour, adding that the conflict in the Red Sea has provided a significant challenge to companies operating in the region.

He stressed the need for vessels seeking safety as they cross this security hotspot and Howden’s commitment to providing solutions through collaboration with specialised marine insurers to launch this facility.

The launch of this new insurance facility expands upon Howden’s track record of brokering insurance solutions for its clients, including coverage for a vessel employed by the United Nations in 2022 to transport grain from Ukraine to the Middle East and Africa.

Also, Howden arranged insurance last year, allowing the UN to proceed with a Ship-to-Ship transfer of crude oil from the FSO Safer, avoiding a potential environmental calamity.

Danny Whiteside, Howden’s Managing Director and Global Practice Leader for Marine, Cargo, and Logistics, highlighted the benefits of insurance in solving global concerns.

He cited Howden’s access to London’s specialist marine insurance market as critical in addressing the direct impact of the fighting in the Red Sea and supporting clients in navigating dangerous waters.

Howden has responded to rising geopolitical tensions in the region by providing war risk cargo insurance to vessels transiting the Red Sea.

The cost of insuring a seven-day cruise through the area has risen dramatically since November following attacks by Yemen’s Iran-aligned Houthis on shipping in support of Palestinians in Gaza.

Ellis Morley emphasised the importance of this new insurance policy, pointing out that it provides critical protection for vessels passing through this security hotspot.

The insurance policy has a 12-month term and covers up to $50 million per vessel. Leading marine insurers Markel and Navium are significant insurers for this coverage.

Morley emphasised that this policy was developed to provide clients with a competitive option once their war coverage was cancelled.

As the facility grows, Howden hopes to maintain competitive premiums by using efficiencies of scale to keep their rating at the low end of what is offered.

The global shipping industry likewise faces increased threats in the Strait of Hormuz, which is on the other side of the Gulf peninsula.

Recent developments, notably Iran’s detention of a container ship in the strait and threats to restrict the critical maritime route have sparked tension.

Morley cautioned of potential coverage restrictions for clients operating in the Persian Gulf, highlighting the dynamic and volatile nature of geopolitical risks in maritime trade.

Reference: Howden Group Holdings

Howden Offers War Risk Cargo Insurance Covering Red Sea Ships Against Drone & Missile Attacks appeared first on Marine Insight – The Maritime Industry Guide

Source: Maritime Shipping News