General Insurance Article - Red Sea Crisis war insurance rates increase after airstrikes

 Key highlights include the following:
 A U.S.-led multinational maritime coalition launched Operation Prosperity Guardian to protect commercial vessels and ensure freedom of navigation in the Red Sea and the Gulf of Aden.

 War insurance rates for marine hull have remained volatile since the beginning of hostilities in October 2023, peaking at 0.7% of hull value before the beginning of Operation Prosperity Guardian.

 We expect an uptick in war insurance prices following the coalition’s airstrikes on January 11, 2024, as Houthi rebels remain committed to disrupt commercial traffic in the Red Sea.

 “In our view, out rated insurers are not expected to be materially affected by the ongoing crisis in the Red Sea given their limited exposure to the war insurance market for marine hull and cargo,” said Marcos Alvarez, Managing Director at Morningstar DBRS.

 “If Operation Prosperity Guardian succeeds in weakening the striking capabilities of the Houthi rebels in the Red Sea and deters other geopolitical actors in the region from providing them with logistical support, we expect war insurance prices for marine hull and cargo to stabilize albeit at levels substantially higher than those preceding the Hamas-Israel War.”
  

 Red Sea Crisis Commentary