Shipping Insurance Doubles After Houthis Sink 2 Ships & Kill 4 Seafarers In Red Sea

The cost of insuring ships passing through the Red Sea has more than doubled after Yemeni Houthis attacked two commercial vessels this week, killing at least four seafarers. The sudden escalation follows several months of reduced activity in the region.

Industry sources confirmed that war risk premiums have now risen to about 0.7% of a ship’s value, compared to 0.3% just last week. In some cases, underwriters have stopped offering cover for voyages altogether.

Some insurance quotes have gone as high as 1%, which matches the highest level seen in 2024 when attacks were happening almost daily.

According to estimates, the cost to insure a $100 million ship for a standard seven-day voyage has increased from around $300,000 to $1 million, adding hundreds of thousands of dollars to every journey.

Marcus Baker, head of marine and cargo at Marsh McLennan, described the situation as unusual and said the dynamics in shipping insurance pricing were unlike anything seen before. He added that some ships may again choose to reroute around the Cape of Good Hope if risks continue.

The Red Sea is a crucial global trade route for oil and commodities. Traffic has dropped significantly since the Houthis began attacking vessels in November 2023, saying their actions support Palestinians during the war in Gaza.

The most recent attacks targeted two Greek-operated bulk carriers- Magic Seas and Eternity C.

The Magic Seas, owned by Stem Shipping and sailing under the Liberian flag, was attacked on July 6, using rocket-propelled grenades, maritime drones, and gunfire, according to reports.

The Houthis later claimed responsibility, saying the attack was in response to what they called “repeated violations” of a ban on visiting Israeli ports. They said the ship sank after the attack.

The next day, on July 7, another Greek-operated vessel, the Eternity C, was attacked. It also sails under a Liberian flag and is managed by Cosmoship. Per reports, the vessel was struck by sea drones and grenades launched from manned speedboats.

At least four out of 25 crew members were killed, and four others were rescued from the sea on Thursday. Some crew members are still missing, and the Houthis said they are holding some of them.

The Eternity C had made stops at Israeli ports in the past year, according to shipping data. The Houthis have attacked over 100 ships between November 2023 and December 2024.

Insurance industry sources said underwriters are trying to avoid providing cover to any vessels linked to Israel, even if the connection is indirect. One official from marine insurer Vessel Protect said the Houthis seem to be following the same targeting approach seen in mid-2024, where any ship with even a small Israeli link may be attacked. He said this type of uncertainty increases the level of risk.

Neil Roberts, a marine and aviation expert at Lloyd’s Market Association, said the attacks show why ship operators need to be very cautious before choosing to transit the Red Sea.

References: Reuters, FT

Source: Maritime Shipping News