Insurers are reassessing their willingness to underwrite as tensions in the Middle East disrupt shipping lanes and threaten supply chains, but ships traveling through the Persian Gulf and Red Sea can still obtain war risk insurance, the International Union of Marine Insurance (IUMI) said.
The marine insurance agency said war insurance will continue to be provided on a single-voyage basis, subject to specific agreements, as long as the voyage is authorized by the government and flag state.
However, insurers are monitoring developments closely and may adjust terms as the security situation changes.
“War insurance in the Persian Gulf and Red Sea is and will be provided on a single voyage specific agreement as long as the voyage is authorized by the government and flag state. In the current fast-paced situation, insurers will regularly re-examine their ability and willingness to provide coverage,” IUMI explained.
The marine insurance agency continued: “By way of explanation, in such circumstances some insurers will issue cancellation notices in respect of their insured’s existing cover.
“This is to enable insurers to reassess risk and then reinstate cover on adjusted terms. It is important to recognize that cancellation notice does not necessarily terminate cover. War cover remains available to owners and operators who wish to take it up.”
IUMI said it and the wider marine insurance community are closely monitoring the situation in the Middle East, particularly the safe and free passage of shipping in the Persian Gulf and Red Sea.
IUMI added: “As with all shipping interests, the safety of seafarers will be shipowners’ top priority.”
The marine insurance agency also pointed out that many ships are currently stuck in the Persian Gulf, and many operators have changed ship routes to avoid high-risk areas.
IUMI added: “Insurers will be mindful of the impact this may have on nearby ports and on ships and crews sailing longer routes. As a result, we may see supply chain disruptions in the short term.”
Earlier this week, in an effort to stabilize global energy flows and mitigate maritime security risks, President Donald Trump directed the U.S. Development Finance Corporation (DFC) to provide political risk insurance and financial guarantees for all maritime trade, particularly energy cargoes passing through the Strait of Hormuz.
Trump said the DFC would make these guarantees available to all shipping lines at “very reasonable prices,” effectively providing federal support to a region that many private insurers currently view as too volatile.
He added that “the U.S. Navy will begin escorting oil tankers through the Strait of Hormuz as soon as necessary if necessary,” reinforcing his administration’s goal of maintaining uninterrupted global energy supply chains.
International credit ratings and research firm Morningstar DBRS later said the proposal may not be enough to quickly resume commercial navigation in the region.
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