The cost of insuring commercial vessels transiting near Yemen has surged following deadly attacks by Houthi militants, who sank two ships and killed crew members this week—sharply highlighting the renewed risks facing this critical maritime corridor.
Shipowners are now facing insurance costs of around 1% of a vessel’s value to transit the Red Sea, according to Marcus Baker, Global Head of Marine Cargo and Logistics at Marsh McLennan, the world’s largest insurance broker. This marks a sharp increase from the 0.2% to 0.3% range seen in recent months, when Houthi attacks had temporarily subsided.
The sharp increase in war-risk premiums—rebounding from recent lows during a period of reduced attacks—reflects mounting concern among underwriters that threats along the vital Europe-Asia trade route have returned to levels not seen since roughly a year ago.
These rates—additional premiums paid by shipowners or charterers to cover voyages through high-risk areas—are expected to drive up costs for the few vessels still transiting the Red Sea. Meanwhile, ships choosing to bypass the region must take the far longer route around Africa, adding thousands of miles to their journeys.
John Cotzias, founding partner at Greece-based Xclusiv Shipbrokers, noted that both insurers and shipowners have witnessed a comparable increase in premiums, rising from roughly 0.4% to nearly 1%.
Houthi militants launched attacks on vessels near Yemen in November 2023, framing the assaults as a response to the conflict in Gaza. Marcus Baker noted that ships with ties to the U.S., U.K., or Israel—or with a history of being targeted—are now subject to steeper insurance premiums.
Photograph of cargo ship; photo credit: Ali Mohammadi/Bloomberg
