Amidst escalating geopolitical tensions and heightened risks in the Red Sea region, Howden, a UK-based insurance broker, has launched an innovative cargo war insurance product. This insurance covers vessels navigating through the Red Sea against potential drone and missile attacks, responding to the increased threats in the area.
Since November, when Yemen’s Iran-aligned Houthis began targeting shipping in the region in support of Palestinians in Gaza, the cost of insuring a seven-day Red Sea voyage has surged by significant amounts.
Howden’s new insurance offering is the first of its kind, specifically designed to protect cargo vessels operating within an active conflict zone spanning the Bab al-Mandab Strait, the Red Sea, and the Indian Ocean.
Ellis Morley, an associate director at Howden specializing in cargo and commodities, emphasized the necessity of such coverage, stating that the conflict in the Red Sea has posed significant challenges for clients operating in the region. The insurance, which provides $50 million in cover per vessel over a 12-month term, aims to address these challenges.
Leading marine insurer Markel and Navium are among the key underwriters for this product. Morley noted that the coverage was established to offer a competitive alternative for clients whose war cover had been terminated.
Looking ahead, Morley suggested potential future challenges in the Persian Gulf, with the possibility of increased restrictions on insurance coverage for clients operating in that region.
