Insurers Cancel War Risk Cover for Gulf Vessels

Summary

In response to the escalating conflict with Iran, multiple marine insurers, including Gard and Skuld, are canceling war risk coverage for vessels in the Gulf region, effective March 5.Reuters+ 2 This move follows attacks that have damaged tankers and stranded ships in the Strait of Hormuz.Reuters+ 2 Consequently, shipping costs have surged, with war risk premiums rising up to fivefold and oil shipping spot rates reaching six-year highs.Reuters The London market’s Joint War Committee expanded its high-risk zone to include waters around several Gulf nations,Reuters+ 2 and shipping lines like Hapag-Lloyd have introduced significant war risk surcharges.Reuters

Impact Analysis

So the insurance market is basically calling the bluff on the Gulf situation. This isn’t just about jacking up premiums; they’re outright canceling war risk policies. Major insurers are saying the risk in Iranian waters is now uninsurable, invoking “actual outbreak of war” clauses.Yahoo Finance This is a massive signal that the risk has fundamentally changed.

It forces shippers to either halt sailings, self-insure, or pay astronomical rates if they can even find coverage. War risk premiums have already jumped 5x to 1% of a ship’s value,marketscreener and lines like Hapag-Lloyd are adding $1,500/TEU surcharges.Reuters This chokes vessel supply through Hormuz, which is why oil is up 9% and tanker rates are spiking.Reuters The market might see a temporary flare-up, but insurers are signaling a structural break. This is a clear catalyst for tanker equities. The supply shock should drive day rates much higher globally, not just in the Gulf.