Some insurers have begun to decline to offer war risk to US and UK merchant ships when they navigate the southern Red Sea, broker Marsh has said. The “not at any price” stance by much of the London market indicates the extent to which the situation is perceived to have worsened over the past seven days. Rates had already more than doubled from the (already elevated) 0.5% that had been seen at the beginning of the year. But the cover had always been available at a price.
Marcus Baker, global head of marine and cargo at Marsh, said that underwriters were seeking exclusions for vessels with links to the US, UK and Israel when issuing cover for trips through the southern Red Sea, which effectively means that they were unwilling to provide insurance.
Baker said that “underwriters are adding clauses saying no US, UK or Israeli involvement. Just about everybody is putting something like that in, and many include the words ‘ownership’ or ‘interest’.”
On Tuesday, bulk carrier Zografia was hit by a missile while sailing in the south of the waterway. A day earlier, US-owned Gibraltar Eagle was struck. The Houthis have now expanded their “legitimate target” range beyond “Israel-linked” to include UK and US-linked merchant vessels.
In a second incident reported Tuesday by the UKMTO, a vessel was approached by four suspicious small craft in the Southern Red Sea. The craft came within 400 metres of the vessel but departed the area after the ship’s armed guards fired warning shots into the water.
Japan’s Mitsui OSK Lines Ltd (MOL) with a fleet of about 800 vessels said on Tuesday that it had halted transits.
While ownership is a relatively straightforward term (although in shipping, few things are ever completely straightforward), the term “interest” has a range that can be very wide indeed. Baker noted that it could span more tangential factors, for example charterers, or previous port visits.
On the plus side, even the missiles and drones that have been getting through to vessels have not, yet, injured any crew or damaged a vessel to any serious extent. There had also now been no drone attacks for approaching a week, indicating perhaps that the US/UK strikes had an impact on Houthi resources in the drone sector. Many vessels are suffering damage to cargo holds, and a few containers are reported to have been seriously damaged during a missile strike, but in the main the ships have got through relatively unscathed.