Houthi attacks in Yemen raise shipping insurance charges
Date
2/26/2024 3:41:20 AM
(MENAFN) Recent attacks by Houthi rebels on commercial vessels in the Red Sea have led to a significant surge in marine shipping insurance premiums. The attacks have raised concerns among insurers about the heightened risks associated with conflicts in the region, prompting them to impose higher fees to cover potential damages and losses. Additionally, the costs of shipping have increased substantially due to the necessity of taking longer alternative routes to avoid areas of conflict, further impacting the profitability of maritime trade in the region.
Since November 19, the Houthi rebels have been targeting commercial ships in the Red Sea and the Arabian Sea, particularly those suspected of having ties to Israel or heading to Israeli ports. The attacks are purportedly conducted in solidarity with the Gaza Strip, which has been embroiled in a conflict between Hamas and Israel since October 7. These targeted assaults have not only endangered maritime security but also disrupted trade routes critical for global commerce.
The repercussions of these attacks extend beyond immediate safety concerns, affecting the economic dynamics of maritime transportation. According to the International Monetary Fund, container traffic through the Red Sea has declined by approximately 30 percent within a year, reflecting the impact of heightened insecurity on commercial activities in the region. Before the onset of the conflict, the Red Sea route facilitated between 12 and 15 percent of global trade, highlighting its strategic significance in international commerce.
For commercial ships operating in volatile regions like the Red Sea, insurance coverage is essential to mitigate risks and protect against potential liabilities. Typically, vessels are insured for three main categories: hull insurance to safeguard against damages to the ship itself, cargo insurance to cover losses related to transported goods, and protection and indemnity insurance, providing coverage for third-party damages and liabilities. The escalation of conflict in the region has heightened the importance of comprehensive insurance coverage for maritime operators navigating through uncertain waters.
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