The marine insurance market is rapidly pulling back from the Red Sea, with several of the world’s leading P&I clubs issuing notices cancelling certain war-risk covers across a vast stretch of waters from the Red Sea into the Indian Ocean, according to maritime news outlet Splash247.
Key facts:
- Clubs: NorthStandard, UK P&I Club, The Swedish Club, London P&I and other International Group members
- Effective date: August 16
- Area: South of latitude 25°30’N in the Red Sea, Gulf of Aden, western Indian Ocean
- Excluded areas: Bab el-Mandeb traffic separation scheme, Yemeni coast, much of Saudi Arabia’s Red Sea coastline
- Buy-back: Cover may be reinstated on separately agreed terms and premiums
Clubs and Timeline
NorthStandard, UK P&I Club, The Swedish Club, London P&I and other International Group members have issued notices over the past 24 hours, following corresponding moves by their commercial reinsurers, Splash247 reported. Most of the changes take effect from August 16.
Geographic Scope of the Exclusions
The affected area extends south of latitude 25°30’N in the Red Sea, through the Gulf of Aden and deep into the western Indian Ocean, according to Splash247. The exclusions specifically include the Bab el-Mandeb traffic separation scheme, the Yemeni coast and much of Saudi Arabia’s Red Sea coastline.
| Affected zone | Coverage detail |
|---|---|
| Red Sea | South of latitude 25°30’N |
| Gulf of Aden | Included |
| Western Indian Ocean | Deep-water area included |
| Bab el-Mandeb traffic separation scheme | Excluded |
| Yemeni coast | Excluded |
| Saudi Arabia Red Sea coast | Substantially included |
The latest exclusions also stretch much further north than some previous Red Sea restrictions, reaching latitude 25°30’N and bringing considerably more of Saudi Arabia’s western coastline within the defined war-risk zone, the outlet reported.
What Remains Covered
The move does not amount to the wholesale withdrawal of conventional mutual P&I insurance, Splash247 clarified. Rather, it principally affects commercially reinsured war-risk components attached to fixed-premium P&I, charterers’ liability policies, non-poolable extensions and other ancillary products.
Buying Back Cover
Several clubs say cover may be bought back or reinstated on separately agreed terms and premiums, according to the report. That means shipowners, charterers and cargo interests may still obtain protection, but on terms negotiated individually with underwriters. This option applies to the affected war-risk components, which are distinct from conventional mutual P&I cover that remains in place.
Underwriting Risk Assessment Deteriorates
The coordinated nature of the notices is another strong indication of how sharply underwriters’ assessment of the region has deteriorated, Splash247 noted. The retrenchment follows the renewed Houthi campaign against commercial shipping.
For finance executives monitoring trade-affected markets, the expansion of the exclusion zone extends the risk perimeter beyond the Bab el-Mandeb bottleneck into the western Indian Ocean and along the Saudi coast, according to the geographic details published by Splash247.
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