Marine war-risk premiums have surged at two critical shipping chokepoints, with direct implications for capacity, transit times, and freight costs on affected trade lanes.
For the Strait of Hormuz, war-risk premiums now run 7.5% to 10% of hull value, up from prewar rates of between 1% and 3%: roughly four times the five-year average rate. For example, insuring a standard tanker-sized cargo now costs approximately $21 million per voyage. Meanwhile, for Bab al-Mandeb, premiums have risen to about 0.5% of hull value following a Houthi blockade announcement against Saudi ports; the rate was repriced within days of the announcement.
In his latest industry update on the impact to the industry of the conflict, Craig Reilly of DASA International Movers said, “Not one insurer has trimmed a war-risk premium this week. Not one carrier has lifted a restriction. The emergency surcharges introduced at the height of the disruption are still sitting on every quote, unchanged. If the zero were real, someone with money at stake would have moved by now. No one has.”
Insurance experts note that premium increases are often less disruptive to shipping economics than what follows: reduced vessel availability, longer alternative routings, delays, and higher fuel costs. Carriers may divert away from these corridors even when coverage remains available, due to crew safety concerns or corporate risk limits.
IAM Member Impact: Underwriters repriced the Bab al-Mandeb risk quickly, a sign the insurance market may continue to move fast if conditions escalate further.
Source: Al Jazeera
Member Contributions: DASA International Movers