Marine war insurance rates will increase for ships operating in the Red Sea and the Gulf of Aden following airstrikes on Houthi targets, according to a leading US financial services firm.
Houthi rebels in Yemen have attacked commercial vessels in the Red Sea since October 2023, raising concerns for shipping lane safety and global trade. Operation Prosperity Guardian – launched by a US-led coalition that includes the UK, Bahrain, Canada and the Netherlands – has carried out airstrikes against Houthi targets to deter further attacks.
A commentary by Morningstar DBRS, Red Sea Crisis: Insurance Rates to Increase Following US and UK Airstrikes on Houthi Targets, noted that war insurance rates for marine hull have been volatile since hostilities began in October 2023, peaking at 0.7% of hull value before the airstrikes. This means a vessel with a total insurable value of $120m excluding cargo would have to pay more than $800,000 extra in insurance costs per trip in the area.
War insurance rates softened by 0.3%–0.35% following the airstrikes, but are expected to rise again as underwriters anticipate Houthi retaliation, the firm added.
The Red Sea attacks are likely to increase demand for marine war insurance, Morningstar DBRS said, with prices expected to rise in response as insurers reassess their exposure.
Managing director Marcos Alvarez suggested that war insurance prices for marine hull and cargo would stabilise – “albeit at levels substantially higher than those preceding the Hamas-Israel War” – if Operation Prosperity Guardian successfully deterred the Houthis and their supporters.
