Turkiye: Duration of war risk offers slashed to 24 hours from 7 days

War risk premiums appear to have soared from approximately 0.1% of the value of a ship to 0.7-1%, given the perils faced by commercial ships in the Red Sea, says the Insurance Association of Turkiye (TSB).

However, not only have premiums increased by 7-10 times, but the duration of war risk offers has also shortened significantly, reported Anadolu Agency quoting a TSB statement. The previously implemented 7-day coverage period has been reduced to 24 hours.

The ongoing attacks by Houthis in Yemen on ships, with connections to Israel, the UK and the US, sailing through the Red Sea, seriously limit imports and exports in the region.

Companies are directing their ships to the Cape of Good Hope to avoid risks in the Red Sea, a measure which increases fuel and operation costs as well as delays. This situation also causes companies’ insurance risks to increase significantly.

In addition, many international insurance companies have recently announced that they have stopped providing war risk coverage for this region, and this situation causes fewer ships to pass through the region, further distressing the market and increasing premiums.

In its statement, the TSB says that there are very few precautions that a merchant ship can take to protect itself against missiles or other weapons and that changing the route and moving away from the area is considered the safest way, especially for ships at high risk.

“Although ship owners may want to follow different routes to avoid the Red Sea as attacks and risks increase, ultimately it will be decided whether the voyage plans are commercially feasible or not, depending on the terms of the charter party, bill of lading or other contract.”

The TSB says that turning to alternative shipping routes results in the same cost, given that safer but longer routes cause an increase in fuel consumption and travel time.

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