The cost of insurance for ships sailing in the Persian Gulf jumped as attacks between Iran and Israel raised risks for vessels in the area.
Underwriters are now charging 0.2% of the value of a ship for calls into the Gulf, up from 0.125% prior to the conflict breaking out, according to Marcus Baker, global head of marine cargo and logistics at Marsh McLennan, the largest insurance broker. Rates have also climbed for calls into the Red Sea, he said.
“There has been some movement in war-risk insurance rates for cargo vessels sailing in the Red Sea, Arabian Gulf and traveling to/from Israeli ports,” Baker said.
While the increase for the Persian Gulf is large in percentage terms, it remains small relative to the overall cost of cargoes and booking a ship. For a giant supertanker, it would mean an additional expense of $75,000, compared with the $153 million cost of a cargo.
Still, war-risk rates can vary depending on the underwriter’s risk tolerance. Some shipowners also see little change to rates as a result of factors such as no-claims bonuses, and in the past have escaped the worst of large insurance hikes.
Baker also said that the length of time quotes are valid for was being cut to 24 hours from 48 hours, reflecting the volatility in the market.
He said there’s been a sharp increase in rates for ships calling at Israel, with charges more than tripling to 0.7% from 0.2% of the cost of a ship.
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