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Howden launches Red Sea cargo war insurance as ship risks surge

Red Sea

(Reuters) — Howden has started offering war risk cargo insurance to cover vessels sailing through the Red Sea against drone and missile attacks as geopolitical tensions escalate in the region, the U.K.-based insurance broker told Reuters Tuesday.

The cost of insuring a seven-day Red Sea voyage has risen by hundreds of thousands of dollars since Yemen's Iran-aligned Houthis began attacking shipping in the area in November in a show of solidarity with Palestinians in Gaza.

Howden said the new product is 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, cargo and commodities, at Howden.

The insurance has a 12-month term and offers cover of $50 million per vessel, Howden said.

Markel is one of the lead underwriters on the product, with Navium as co-lead, Howden added.

“This cover was put in place to provide a competitive option for clients whose war cover had been canceled,” Morley said.

Global shipping is also grappling with increased threats in the Strait of Hormuz on the other side of the Gulf peninsula.

Iran's Revolutionary Guards seized a container ship in the strait on April 13, days after Tehran vowed to retaliate for a suspected Israeli strike on its consulate in Damascus on April 1.

Iran had said it could close the crucial shipping route.

“We could see increasing restrictions on coverage available to clients operating in the Persian Gulf,” Mr. Morley said.