Red Sea Attacks could drive up Insurance Rates
Merchant ships traversing the Red Sea could see a rise in costs for insurance cover.
By Vikram Malik, Maritime Direct India Correspondent
A series of attacks on vessels traveling through the Red Sea in Saudi Arabian waters might compel insurance companies to seek higher premiums on the cover they provide.
Coming against the backdrop of the outgoing U.S. administration’s decision to designate the Iran-backed Houthi movement in Yemen as an FTO or Foreign Terrorist Organisation, these are relatively unchartered territories, given that similar concerns have only been raised for the Arabian Gulf – and not the Red Sea region.
Just last month, the Singapore-flagged BW Rhine was rocked by an explosion, allegedly by a small ‘bomb boat’ packed with explosives, while moored at the Port of Jeddah. The ship was carrying more than 60,000 tons of unleaded gasoline from a Saudi Aramco refinery.
Referred to as a “breach” premium, incremental insurance costs are added on when ships enter high-risk areas. The risk of attacks by militia groups is rendering the busy Red Sea region as such a “high-risk area” when hitherto, that was not the case.
Tensions in this area have especially heightened after Iran’s seizure of the South Korean oil tanker, MT Hankuk Chemi in the Persian Gulf, which we had reported earlier this month.
