Threat of attack on the Suez Canal sent ship insurance prices soaring

Threat of attack on the Suez Canal sent ship insurance prices soaring

Occupying Zionist Israel’s attacks against Palestinians continue. The genocidal attacks, which started on October 7 and continued for months, caused a humanitarian crisis in the region before the eyes of the world, while also negatively affecting the global economic system.

Following Israel’s attacks, the Houthis in Yemen announced that they would target ships passing through the Red Sea and going to Israeli ports.

Since November 19, the Houthis have targeted many ships heading to the terrorist state Israel, dealing a major blow to the invaders’ trade artery connected to the Suez Canal. The region, where the Red Sea and Suez Canal’s maritime trade route opening to the Mediterranean is located, has become a ring of fire due to the influence of Israel and the Zionist lobby and the maritime protection force established under the leadership of the USA against the Houthis.

New crisis in the global economy: Ship insurance premiums

The flames of this ring of fire caused a major crisis in global trade to flare up.

The 193-kilometer-long Suez Canal, which connects the Red Sea to the Mediterranean, mediates approximately 12 percent of global trade. However, due to the tension caused by the massacres in Israel, there is a decrease in transit through the Suez Canal.

Passages through the canal, where an average of 49 ships pass daily, have decreased by approximately 40 percent in the last two months. While the decrease in ship transits alone constitutes a major problem for global maritime trade, this has also caused ship insurance premiums to increase and the economic crisis to reach gigantic proportions.

Ship insurance premiums increased up to 10 times

Due to the rising tension in the Red Sea, premiums demanded for war insurance in the region began to rise.

While it is stated that the biggest item in the insurance cost of a ship that is going to go to places with high war risk may be the war risk premium, it is stated that the increase in the security level of the ships that will call at Israeli ports after the start of the Gaza attacks has seriously disrupted the maritime transportation in the Eastern Mediterranean and the ports in the region. It was learned that the additional war risk premiums to be paid by the ships that will carry out the operation have increased up to 10 times.

What are the factors that determine premiums?

There are different factors in determining ship insurance premiums.

While each insurance company makes pricing according to its own risk perception, whether the ship has hijack or ransom insurance and additional security measures on the ship are also taken into account in the pricing.

Ever Green’s crash changed insurers’ view

On the other hand, after the accident in the Suez Canal, where the tanker ship The Ever Given blocked the canal for days and caused a negative impact on global trade, it was learned that insurers’ view of the canals moved towards negative.

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