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War Risk Insurance Skyrockets After Sub Attack
6 Mar
Summary
- Marine war-risk coverage cancellation notices issued by underwriters.
- Insurance rates for vessels have tripled in some cases.
- Cargo insurance costs have jumped significantly in affected areas.
International marine underwriters have begun issuing notices to cancel war-risk coverage, particularly affecting high-risk waters such as the Persian Gulf and Iran. This action follows a US submarine sinking an Iranian warship, an event that has amplified risk perceptions within the shipping industry. The cost of reinstating coverage through buybacks after policies lapse has surged, tripling in some instances and reaching $750,000 per vessel, far beyond usual wartime increases.
The scope of the conflict's impact is widening, with a recent Indian Ocean strike underscoring fears that the war's influence is extending geographically. Consequently, premiums for hull and related marine coverage have seen a sharp rise. Insurers have cited the escalating situation in the Persian Gulf as a primary concern, leading to cancellations in war-affected areas.
Beyond vessel insurance, cargo insurance has also been significantly impacted. War-risk cover for cargo has jumped from approximately 0.03% to around 1% of cargo value in affected zones. If hostilities continue, buyback options for coverage may cease to be available, further complicating operations for shipping lines in these volatile regions.
