Hong Kong’s marine insurance market is expanding its role in war-risk cover for Chinese shipowners as the conflict in the Middle East increases loss and volatility risks for energy, marine, and credit insurers worldwide, according to regulators and market analysts. The developments indicate a shift in where Chinese shipping risks are placed and changes in pricing, wordings, and capital markets exposure linked to higher-for-longer oil prices.
Hong Kong’s Insurance Authority (IA) has supported the creation of a dedicated war-risk insurance pool that started operating in November 2025 and currently covers 10 mainland Chinese vessels sailing in the Gulf. The pool, backed by five Hong Kong insurers, offers up to US$130 million in protection for Hong Kong and mainland shipowners against war and emergency risks. “The Middle East tensions in recent days have proven that the marine specialty risk pool is very much needed to provide insurance cover to shipowners. This is very important for Hong Kong to act as a marine insurance centre in the region, as it shows the city has the capacity to provide this type of cover,” IA chairman Stephen Yiu Kin-wah said, as reported by SCMP.
IA chief executive Clement Cheung Wan-ching said that, without such a pool, Chinese and Hong Kong shipowners would largely have had to obtain war cover from London underwriters, at higher premium levels. “China owns one of the largest numbers of ships worldwide, while Hong Kong insurance companies are familiar with these Chinese companies and their business models. It is therefore Hong Kong’s role to provide marine insurance cover for these shipowners at a cheaper cost than overseas insurance markets,” Cheung said. Standard hull and cargo policies exclude war perils, so shipowners must arrange additional war insurance when transiting designated conflict zones. Vessels entering the Gulf have been required to purchase this cover as security risks have increased.
According to Ocean Chiu Wai-yeung, associate director of general business at the IA, global war-risk prices for ships in the Gulf and other listed areas have risen sharply since the latest outbreak of hostilities in the Middle East. In Hong Kong, war premiums have increased by about five to 10 times since the start of the Iran-related conflict, compared with international rates that have climbed by more than a factor of 10, Chiu said. He said marine insurance premiums written in Hong Kong were up 33% in the first nine months of 2025 compared with the same period a year earlier, reflecting shifts in exposures, insured values and demand for war-risk cover.
The war-risk pool has been introduced alongside national and local policies aimed at developing Hong Kong as a shipping and risk hub. Under China’s current five-year plan, Beijing has set a goal for Hong Kong to become an international insurance and risk management centre. Locally, chief executive John Lee Ka-chiu announced tax exemptions for ship-leasing businesses and tax concessions for marine insurance, shipping management, agencies, and broking in his October 2024 policy address. “We have seen these measures have promoted Hong Kong to develop as a risk management centre for shipping, and the trend is expected to continue in the coming years,” Cheung said.
Government data show that Hong Kong is the world’s fourth-largest ship register – after Panama, Liberia, and the Marshall Islands – with about 2,600 vessels totalling 130 million gross tonnes and 82 authorised shipping insurers. This scale allows local carriers and brokers to expand war, hull, and cargo business with Chinese and regional clients. At the same time, Beijing has called for an end to the conflict and has stressed the importance of the Strait of Hormuz and nearby waters as key channels for international trade. Energy intelligence firm Vortexa recently estimated that 35 unladen very large crude carriers, each able to carry roughly 2 million barrels, were waiting on the eastern side of the strait, with the timing of a full reopening described as highly uncertain.
The regional developments in Hong Kong are taking place against a broader backdrop of market disruption set out in a recent Allianz Trade report, “Conflict in the Middle East: Implications for markets and macro.” Allianz describes the situation as a “non-linear geopolitical shock,” with the main transmission channel running through the Strait of Hormuz, which handles around 30% of global seaborne oil flows and a significant share of liquefied natural gas shipments.
Following recent US-Israeli strikes on Iran and Iranian attacks on energy infrastructure and shipping, spot oil prices briefly rose to about US$82 per barrel, roughly 13% above the prior close. Shipping data cited in the report showed more than 200 oil and LNG vessels waiting outside the strait as war-risk costs and operational precautions increased. In its baseline scenario, where the conflict is contained within a few weeks, Allianz expects oil to average about US$85 per barrel in 2026, with prices temporarily rising to around US$90 before easing back towards US$70 to US$75 as tensions moderate.
Allianz highlights higher exposure in marine hull, cargo, and war lines to physical damage, loss of hire, and delay claims, and notes that war-risk markets are already seeing increased demand and tighter wordings. Energy insurers with portfolios covering offshore platforms, refineries, and pipelines in the Gulf are monitoring the possibility that short-term disruption could shift into sustained damage, driving larger property and business-interruption losses. In a more adverse “prolonged conflict” scenario, Allianz suggests Brent prices could move above US$100 per barrel and potentially test US$120 to US$130. That outcome would create a second supply-driven inflation shock and weigh on insurers’ underwriting results and investment portfolios through higher claims costs and more volatile financial markets.
From an inflation perspective, Allianz estimates that an extended period of oil in the US$80 to US$90 range would add about 0.1 to 0.2 percentage points to headline inflation in the euro area and the US in the near term. On its own, that is not seen as enough to alter central banks’ policy paths, but it could keep cost pressures elevated in sectors already facing higher input prices, including transportation, construction, and manufacturing.
This points to continued claims inflation in motor, commercial property, and business-interruption lines, where energy and materials costs feed into repair expenses and loss-of-income calculations. Marine insurers may also need to monitor underinsurance risk, as higher bunker costs, war surcharges, and rerouting can increase freight rates and cargo values without corresponding adjustments to sums insured.
On the asset side, Allianz’s baseline assumes that 10-year US Treasury yields gradually move towards the 4.5% to 5.0% range, with German Bunds in the 3.0% to 3.5% range, as central banks keep policy rates on hold for longer before easing. For life and multi-line insurers, higher yields support reinvestment income but can put short-term pressure on unrealised bond values and solvency metrics. Equity markets, particularly in technology and other growth sectors, are seen as exposed to either delayed rate cuts or a sharper slowdown, which is relevant for carriers with sizeable equity holdings or unit-linked portfolios. The report points to infrastructure as relatively resilient across a range of inflation and growth scenarios and assumes around a 10% positive return from infrastructure in 2026 under its baseline, although private-debt spreads could widen significantly in a severe downturn.
