Israel scrambles to address maritime insurance freeze after Houthi attacks, sources say

Middle East Eye

16-07-2025

Israel has approached marine insurers about the status of war risk coverage for vessels with indirect ties to Israel amid concerns that back-to-back Houthi attacks in the Red Sea could hurt traffic at the port of Haifa, two shipping sources have told Middle East Eye.
In early July, Yemen's Houthis launched a sophisticated and multi-pronged attack on The Magic Seas and The Eternity C, two Greek-owned and Liberian-flagged vessels in the Red Sea.
Both vessels were sunk by the group, officially known as Ansar Allah.
The attacks were the largest in scope, and firepower, since the Houthis began targeting ships in the Red Sea in November 2023 in what they say is solidarity with besieged Palestinians in the Gaza Strip.
"There is a big discussion in the market right now whether insurers should cover vessels with even indirect connections to Israel," one of the shipping sources told MEE.
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"This is not good for Israel. The optics are damaging. The Israelis have spoken to insurers and shipping companies."
Israel was alarmed after Eternity C's US-based insurer, Travelers, decided not to extend war risk coverage on the vessel before its passage in the Red Sea.
The decision is likely to leave the Greek operator, Cosmoship Management, with losses of around $20m based on the estimated value of the vessel.
It also means that ship owners and operators could eschew calling at Israeli ports for fear of not obtaining coverage in the future.
"Vessels are going to start to avoid calling at Israeli ports. It's not about getting hit by the Houthis, but the chance of not being insured," a maritime security official told MEE. "Does a secondary or tertiary link to Israel mean you can be denied coverage?"
'The Houthi strategy is to attack vessels without getting the US drawn in'
- Mohammad al-Basha
The Eternity C had no direct link to Israel, but Cosmoship vessels regularly called at Israeli ports last year. The CEO of Stem Shipping, the owner of Magic Seas, acknowledged that his vessels sometimes call at Israeli ports also.
There are multiple layers to maritime insurance. Underwriters are able to levy additional premiums on vessels transiting a list of designated areas viewed as high on "war risk".
The list is drafted by Lloyd's of London's Joint War Committee. Vessels are required to notify their insurers before travelling in these areas. In the case of Eternity C, Travelers refused to provide additional coverage to the vessel, Lloyd's List, an insurance journal, reported.
The Houthi attacks prompted many vessels, especially container ships, to avoid the Red Sea route between Asia and Europe in favour of the longer journey around Africa's Cape of Good Hope. However, dry bulk carriers, tankers and many Chinese vessels have continued to transit the Red Sea.
Pressure from Israel to restart attacks
The Houthis stopped attacking vessels in January when a short-lived truce between Hamas and Israel was in effect. Israel unilaterally withdrew from the ceasefire in March, and the Yemeni group started firing missiles at Israel, although they refrained from maritime attacks.
US President Donald Trump then began a widespread bombing campaign against the Houthis that lasted until 6 May. Trump's decision to stop the strikes came in response to lobbying by Saudi Arabia, the Houthis' former foe, MEE revealed at the time.
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The agreement was framed as one between the US and the Houthis only. Oman, which mediated between Washington and the group, said that "neither side will target the other" but said it included commitments for the "smooth flow of international commercial shipping".
Roughly two weeks after the agreement, the Houthis said they were imposing a "maritime blockade" on the Israeli port of Haifa.
"This was never a written ceasefire. It is an understanding and specific only to the US. The Houthi strategy is to attack vessels without getting the US drawn in,' Mohammad al-Basha, a Yemen analyst at the Basha Report risk advisory firm, told MEE.
The Houthis largely sat out the recent conflict between Israel and the group's reported patron, Iran, following Israel's surprise attack on the Islamic Republic in June. Basha said that the attacks earlier this month were likely coordinated with Tehran.
"The attack was clearly intended to send a message when Netanyahu was at the White House. The message from Trump would be that you [Netanyahu] are a distraction and headache," Basha said.
The attacks on the two Greek vessels took place between 6 and 7 July, just before Israeli Prime Minister Benjamin Netanyahu's visit to Washington.
Israel said it bombed Houthi-controlled ports and a previously captured cargo vessel in between the attacks. A US official confirmed to MEE that Israel has asked the US to resume striking the Houthis.
"There is a lot of pressure from the Israelis but no appetite at the moment in the administration to resume operations. US vessels have not been attacked," the US official told MEE.