Red Sea Risk Isn’t Over: Why War-Risk Premiums Are Spiking Again

What changed

• Recent incidents increased perceived risk for listed areas and raised select quotes.
• Underwriters ask for clearer routing plans and mitigation steps before binding.
• Convoy timing and BMP5 adoption improve acceptability for sensitive profiles.

Treat the range as planning guidance. Always confirm live quotes with your broker for each transit window.

Immediate actions for owners and operators

• Prepare a concise risk brief per voyage with routing and AIS policy.
• Confirm who pays the AP in the charterparty and note any caps.
• Clarify crew war bonus and how extra security costs are handled.

Keep a one page checklist on the bridge so the whole team follows the same playbook.

KPI pulse

Refresh figures before each fixture. Pricing can move quickly after a casualty.

KPI board

Hotspots and premiums can change quickly after a casualty. Refresh numbers before each fixture.

Lane texture

MEG is Middle East Gulf. GoA is Gulf of Aden. EAFR is East Africa.

Owner checklist for the next fixture

1. Confirm who pays the AP in the charterparty. Note any cap or sharing rule.
2. Issue voyage notice early and attach the routing plan with BMP5 measures.
3. Run sanctions screening on cargo, receivers, and any STS partners.
4. Keep a schedule buffer to avoid a second seven day AP period.

Store the charterparty, binder, and risk brief in one place for both bridge and shore.

Key indicators

Rates can sit below or above the planning band depending on voyage profile, flag, cargo, and counterparties. Align with your broker’s live feed for the week of sailing.

Pulse board

Figures are directional. Use the latest circulars and quotes for binding terms.

Signals to watch next

• Any casualty with hull damage or crew harm can trigger short term repricing.
• Changes to listed area boundaries from the Joint War Committee.
• Convoy availability and routing advice from naval sources.
• Banking or sanctions advisories touching receivers or STS partners.

Log these signals in the voyage brief so decisions are traceable.

Plain language definition

AP is a time limited purchase that reinstates war cover for a voyage into a listed area. The quote is a percent of hull value for a seven day window. The start of that window and the trigger for inception are set by the binder wording. It may be tied to entry into the listed area or to a specified inception time. Confirm the trigger and the exact clock with your broker before sailing.

• Quoted per transit window, not per year.
• Requires advance notice to the insurer with routing and ETA.
• Evidence of risk controls can improve acceptability.

Listed areas are defined by the London market’s Joint War Committee. Check the latest circular for boundaries.

AP components

BMP5 is Best Management Practices. STS is ship to ship operation.

Binding and sailing steps

1. Draft a one page risk brief with route, convoy options, and speed plan.
2. Issue notice and request AP quote with entry window and ETA.
3. Confirm who pays AP in the charterparty with any cap or sharing rule.
4. Bind cover, align bridge checklist, and record the seven day clock start per binder.
5. Track progress to finish inside the window and avoid a second period.

If delay risks grow, adjust speed early or hold outside the area to avoid starting a new window.

Controls that protect budget

• Require written approval for any routing change that affects exposure.
• Keep acceptance photos and delivery records for sensitive cargoes.
• Adopt the refreshed BIMCO war-risk clauses to reduce disputes.

Quotes can exceed the planning band for certain profiles or destinations. Use broker confirmed numbers for any live fixture.

Owner calculator

How to read the output

• AP cost equals hull value times AP rate times the number of seven day periods.
• Diversion cost equals extra days times fuel burn times bunker price plus any daily time value.
• If the voyage might spill past the window, model two AP periods to avoid a surprise.
• AP avoids extra miles but keeps exposure inside the listed area. Diversion lowers exposure but can miss berths and cut schedule reliability.

This sketch excludes K and R, security teams, weather, Canal dues, and port cost deltas. Confirm all costs with your ops and bunker desk.

Playbook to minimize cost

1. Align charterparty on who pays AP and set a cap if possible.
2. Issue notice early and include a clear routing plan.
3. Optimize speed so arrival lands well inside the seven day window.
4. Hold outside the listed area if delay risk grows, then start the clock when ready.
5. Rerun this calculator with live bunker and time values before final routing.

Lane overview

MEG is Middle East Gulf. GoA is Gulf of Aden. EAFR is East Africa.

Levers you can pull

• Start the AP clock only when ready to transit and avoid idle inside the area.
• Use speed management to finish well inside the seven day window.
• Package mitigation evidence for insurers to support availability and rate.
• Pre plan STS or port calls to reduce loitering near high risk water.
• Align crew war bonus and security costs with charterparty terms.

Clause posture that reduces disputes

• Adopt refreshed BIMCO war risk clauses so duties and rights are clear.
• Define who pays AP, add a cap, and specify triggers for re routing.
• Mirror wording in contracts with receivers and bunker suppliers.

Keep one signed pack so bridge and shore refer to the same clauses.

Quick KPIs to track per voyage

Winners

• War-risk underwriters: more breach covers written where appetite exists.
• Bunkering hubs along the Cape: higher liftings when services divert.
• Security and advisory firms: demand for escorts and BMP5 alignment.
• Ports with flexible windows: better schedule absorption when vessels slip.

Winners capture value when routing shifts or risk documentation improves availability.

Losers

• Operators locked to Suez schedules: tighter buffers and knock-on delays.
• Charterers on contracts that absorb AP: higher voyage OPEX sensitivity.
• Cargoes with hard delivery windows: increased risk of berth misses.
• Trades with thin TCE margins: AP or diversion can flip voyage economics.

Losers face cost inflation or service variability without matching revenue uplift.

Exposure matrix

CP is charterparty. TCE is time charter equivalent.

Plays to shift from neutral to winner

1. Bundle risk brief and mitigation photos with the AP request.
2. Quote Suez with AP and Cape alternatives side by side.
3. Negotiate AP caps and pass through terms before fixing.
4. Stage bunkers and provisions to avoid loitering in hot zones.

Clause toolkit

• JWC Listed Areas: entry requires notice and AP per binder terms.
• CONWARTIME and VOYWAR: use the refreshed BIMCO versions for modern triggers and responsibilities.
• Sanctions and banking: require end to end screening on cargo, receivers, and any STS partners.
• Security posture: reference BMP5 and AIS policy in the CP to show mitigation.

Keep one signed clause pack so bridge and shore work from the same wording.

Allocation checklist

Make the reimbursement flow clear: documents, deadlines, and account details.

Binding steps that prevent disputes

1. Draft the voyage risk brief and list the exact listed area entry point and timing.
2. Send notice and request AP with the brief and a routing map.
3. Confirm the AP payer, cap, and the inception trigger in writing.
4. Adopt the refreshed BIMCO clauses in the CP and mirror them downline.
5. File all approvals and photos in the same voyage pack for claims handling.

Controls that protect budget

• Start the seven day AP clock only when ready to transit.
• Record convoy timing and bridge brief signatures before entry.
• Require written approval for routing changes that raise exposure.
• Re run the AP vs Cape comparison if delays threaten the window.

Good records speed claims and reduce back to back disputes.

Pre-sail preparation

1. Draft a one page risk brief: route, convoy options, pilotage, speed plan.
2. Issue notice to insurer: entry window, ETA, contact details.
3. Confirm charterparty: who pays AP, caps, proof required, payment timing.
4. Run sanctions checks: cargo, receivers, financiers, any STS partners.
5. Stage bunkers and provisions: avoid loitering near chokepoints.

Keep the brief, the binder wording, and the CP addenda in one shared folder.

Bridge actions at transit

• Adopt BMP5: lookouts, citadel plan, lighting and hardening as applicable.
• Set AIS policy: continuity and messaging per risk brief and local guidance.
• Record start of the seven day AP clock per binder wording: inception may be tied to entry into the listed area or to a specified inception time in the binder.
• Coordinate with naval advisories: convoy windows and reporting points.
• Log photos or scans of controls: helps claims and back to back recovery.

Stay inside the AP window

• Target arrival with a buffer: 12 to 24 hours before window expiry.
• Adjust speed early if weather or traffic threatens schedule.
• Hold outside the listed area if delays grow: start the clock when ready.

A second period multiplies AP cost. Re-run your AP versus Cape model if buffer erodes.

Documentation checklist

• Notice and binder confirmation: saved in voyage pack.
• Sanctions screening results: cargo and counterparties.
• Bridge risk brief: signed by Master and OOW on watch change.
• Convoy timings and reports: screenshots or PDFs retained.
• Photos of controls and delivery evidence: dated and geo tagged if possible.

Good records reduce disputes and speed reimbursements.

What to track

• Insurer circulars: pricing tone, appetite, listed area notes.
• JWC updates: any boundary changes for listed areas.
• Incident logs: attacks, interdictions, near misses, and casualties.
• Naval advisories: convoy schedules and reporting procedures.
• Banking and sanctions advisories: exposure for receivers and financiers.

AP quotes can move within hours after an incident: re-validate signals and quotes before sailing.

Tracker board template

Replace placeholders with your live data feed and retain snapshots in the voyage pack.

Simple alert rules

• If any casualty leads to crew harm: escalate to senior review before entry.
• If AP quote rises above your cap: re-model with Cape diversion and delay impacts.
• If convoy slots are withdrawn: pause and refresh the risk brief.
• If sanctions screening flags a counterparty: seek written clearance or change routing.

Hand off to the next watch

• Summarize open items and the seven day clock status.
• Share contact list: broker, insurer, naval desk, port control.
• Note next decision time: speed up, hold, or re-route.