Insurance companies have stopped providing coverage for Israeli, US and UK ships sailing on the Red Sea, CNN and Loadstar have reported. This is a significant and unusual step that leaves Israeli ships with two options: to circumnavigate Africa via the Cape of Good Hope, which adds at least two more weeks and more costs to the voyage, or to use feeder ports in the Eastern Mediterranean, where the goods will be unloaded and reloaded on ships to Israel.
Estimates are that the Houthi attacks, which began on November 19, with the hijacking of the Galaxy Leader, owned by Israeli Rami Ungar, saw insurance premiums for the Red Sea jump from 0.01% of the value of the goods on the ship to 1% at the beginning of December. This meant that a container shop with 12,000 TEU with goods worth $100 million, would have to pay $1 million shipping insurance more to sail via the Red Sea.
"The insurance market is clearly tightening, Marcus Baker, global head of marine, cargo and logistics at Marsh, the insurance brokerage and risk advisory unit of Marsh McLennan told "CNN." "Some insurers are no longer willing to underwrite war-risk insurance for vessels with ownership or involvement with the US, UK or Israel traveling through the Red Sea."
But insurer Breeze chief insurance officer Patrizia Kern told "Loadstar" she was not aware of insurance companies actually withdrawing cover for sailings via the Red Sea, but said she expected higher premiums, particularly amid indications that efforts to deter the Houthi attacks had failed."
The exception among the large western shipping companies that was continuing to sail in the Red Sea is CMA CGM, which is accompanied by French warships. But this week it bowed to pressure and diverted the 9,300 TEU APL container ship around the Cape of Good Hope.
Kern told "Loadstar" that avoiding the disputed Red Sea waterway remained the best course of action, but noted that diversions around the Cape of Good Hope, which add 8-10 days to sailing times, presented their own problems.
"The longer the goods are at sea, the greater the exposure to risk," she said.
Published by Globes, Israel business news - en.globes.co.il - on January 25, 2024.
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