The world’s biggest maritime insurers and insurers’ clubs are ending war risk coverage for vessels transiting the Persian Gulf and the Strait of Hormuz, following the escalation of the conflict in Iran.
As of midnight London time on March 5, most major insurers will terminate war risk coverage, various circulars from the insurance clubs say.
The American Steamship Owners Mutual Protection and Indemnity Association issued on Sunday a Notice of Cancellation in respect of war risks exposures within the Persian/Arabian Gulf and the Gulf of Oman. These areas are defined as follows: Persian/Arabian Gulf and adjacent waters including the Gulf of Oman and waters west of the line from Oman’s territorial limit off Cape al-?add at 22°42.5’N, 59°54.5’E northeast to the Iran-Pakistan border at 25°10.5’N, 61°37.5’E.
The notice will take effect 72 hours after 00:00 GMT on March 2, 2026, the association said.
Separately, the London P&I Club issued a similar notice with the same parameters of withdrawing war risk coverage, noting that all other terms and conditions remain unchanged.
Assuranceforeningen Skuld also ended war risk coverage in view of “a materially heightened level of geopolitical and operational uncertainty.”
“It is already evident that reinsurers’ appetite for war?risk exposure is tightening, and in practical terms, it will result in reinsurers withdrawing capacity at short notice,” Skuld said.
Before the escalation in Iran and Tehran’s retaliatory strikes at the UAE, Kuwait, and Bahrain, the war risk premiums for the Persian Gulf were around 0.25% of a vessel’s hull value.
These rates are set to jump by 50% or even higher, Insurance Business reports, citing market analysts. This would mean that for a $100-million supertanker, the so-called Very Large Crude Carrier (VLCC), the insurance cost would surge to $400,000 for a single voyage, up from about $250,000 prior to the conflict, Insurance Business notes.
By Charles Kennedy for Oilprice.com
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