The cost of war risk insurance for ships sailing through the Red Sea is rising, adding another potential barrier to trade passing through a waterway the U.S. Navy has described as too dangerous for commercial shipping.
Insurers now charge between 0.75% and 1% of a ship’s value to sail through the region, according to people familiar with the matter, a big jump since US and British airstrikes targeted Houthi rebels in Yemen last weekend. Just a few weeks ago, cover rates were about a tenth of that amount. This sharp increase risks making crossing the vital waterway very expensive.