Howden Offering War Risk Cargo Insurance for Red Sea Routes

Howden has begun offering war risk cargo insurance for vessels traversing the Red Sea to safeguard against drone and missile attacks amid rising geopolitical tensions in the area, the UK-based insurance broker reported to Reuters on Tuesday.

Since Yemen's Iran-aligned Houthis started targeting ships in the region in November to express solidarity with the Palestinians in Gaza, the price for insuring a seven-day journey through the Red Sea has surged by hundreds of thousands of dollars.

Howden introduced what it describes as the "first dedicated insurance coverage of its kind to protect cargo vessels within an active conflict zone, which encompasses the Bab al-Mandab Strait, the Red Sea, and the Indian Ocean."

"The conflict in the Red Sea has presented a significant obstacle to clients with operations in the region. Vessels are seeking protection as they navigate this security hotspot," said Ellis Morley, associate director of cargo and commodities at Howden.

The insurance policy, which is valid for 12 months, provides coverage up to $50 million per vessel, according to Howden.

Markel, a prominent marine insurer, is one of the primary underwriters for this insurance product, Howden disclosed.

"This cover was put in place to provide a competitive option for clients whose war cover had been cancelled," Morley stated.

"As our facility grows, we have more of a scale of economy and the strategy is to keep our rating at the bottom end of what is available," Morley further explained, indicating the goal to maintain lower premium rates, though specific figures were not disclosed.

The issue of maritime security is also intensifying in the Strait of Hormuz, at the opposite end of the Arabian Peninsula.

Following a vow by Iran to retaliate for a suspected Israeli strike on its consulate in Damascus on April 1, Iran's Revolutionary Guards captured a container ship in the strait on April 13. Iran had previously threatened to shut down this vital maritime passage.

"We could see increasing restrictions on coverage available to clients operating in the Persian Gulf," Morley noted.