Marine insurance companies are moving to cancel or reprice cover for ships operating in and around the Gulf after US and Israeli strikes on targets inside Iran triggered missile attacks and retaliatory military actions across the region, sharply escalating war-risk concerns.
According to media reports, underwriters are reassessing exposures in what is now widely being treated as a "war zone", with additional premiums for some voyages expected to rise by as much as 50%.
Shipowners are weighing whether to reroute vessels away from the Strait of Hormuz to reduce risks to crews and cargo, even as they face mounting costs and delays on already stretched global trade lanes. According to reports, roughly 20% of the world's supply passes through the Strait of Hormuz, together with a significant share of global liquefied natural gas (LNG) exports, so any sustained disruption to traffic through the waterway would have direct implications for energy markets, marine insurance and reinsurance, and broader supply chains.
In connection with the situation, Assuranceforeningen Skuld (Gjensidig) has notified clients that it is cancelling war‑risk cover for business in and around Iran and the Arabian/Persian Gulf.
The company said it is "following closely the concerning developments in Iran and the wider Arabian/Persian Gulf, which have resulted in a materially heightened level of geopolitical and operational uncertainty," and warned that reinsurers' appetite for war-risk exposure is already tightening, with capacity being withdrawn at short notice.
The cancellation applies across multiple product lines and wordings, including owners’ fixed P&I cover extensions for war (primary and excess hull value) risks, charterers’ cover, offshore terms & conditions, yacht terms & conditions, yacht crew liability and a range of optional covers.
For assureds and brokers, the move means vessels intending to call at or transit through the affected areas will need alternative war‑risk arrangements, potentially at substantially higher cost and on tighter terms, or will need to avoid those waters entirely.
Meanwhile, market practitioners said the immediate focus is on pricing and crew concerns.
Dylan Mortimer, marine hull UK war leader at Marsh, said that the primary risks centre on the threat of vessel boarding and seizure by Iranian forces, as well as the potential closure of the Strait of Hormuz.
"It is very early to tell at this point, but we would estimate that near‑term rate increases for marine hull insurance in the Gulf could range from 25-50%, barring any direct attack on merchant shipping, which could have major repercussions across war insurance rates," he said. "Given the military build‑up in the region, crew are far more likely to be concerned than they might have been to previous risks. The situation remains very fluid, requiring ongoing attention.”
Similarly, Stephen Rudman, head of marine - Asia, at Aon, outlined some of the primary actions that have been taken including: issuance of formal notices of cancellation under standard seven-day war clauses on certain annual hull war policies; withdrawal or revision of existing quoted Additional Premiums (APs) for transits through listed high-risk areas; reinstatement of cover being offered at materially increased rates; and heightened underwriting scrutiny for voyages into or near sensitive zones, including potential requirement for prior approval. "Importantly, this activity relates specifically to war risk extensions. Core hull and machinery and P&I covers remain in place unless otherwise advised," he said.
"The hull war market has reacted more immediately due to aggregation exposure and capital sensitivity. Additional premiums for vessels transiting high-risk waters are rising sharply and may continue to fluctuate in the short term," Rudman continued. "Cargo war risk remains available; however, rates are increasing and quotations are being reviewed on a voyage-by-voyage basis, particularly for energy and bulk commodity trades.
"At this stage, we are not seeing a systemic withdrawal of capacity. Rather, the market is repricing to reflect the elevated risk profile and reinsurance constraints. Should the situation escalate materially (e.g., sustained state conflict or significant vessel loss), further rate correction is likely."
Marine brokers expect insurers across the market to follow with their own cancellation or repricing measures, particularly where 48‑ or 72‑hour war‑risk cancellation clauses are embedded in hull and P&I policies. Additional premiums for single voyages into newly defined high‑risk areas could increase sharply, depending on flag, vessel type, trade and security arrangements.
War risks are generally excluded from standard hull and P&I policies, so owners must buy separate war-risk and strikes/terrorism cover. Faced with rising rates and heightened operational risk, some shipowners are now considering longer alternative routes to avoid the Strait of Hormuz, although diverting around the Gulf adds days or weeks to voyages and may not be commercially viable for all trades.
Meanwhile, oil markets have already reacted to the escalation, with prices rising on expectations that any prolonged disruption in Hormuz could choke off a fifth of global supply and a large share of LNG exports. Given that approximately 20% of global oil supply moves through the strait, even partial interruptions can trigger sharp price moves and increase hedging and credit‑risk concerns for traders and refiners.
Air traffic across the Middle East has also been severely disrupted after several countries closed their airspace fully or partially in response to the strikes and missile activity. Regional and international airlines have suspended or rescheduled flights to and from affected destinations, compounding operational and insurance challenges for aviation underwriters and brokers.
The latest military developments come as major shipping lines had already diverted away from the Red Sea and Suez Canal because of earlier security incidents, routing via the Cape of Good Hope instead. That detour increased voyage times, fuel consumption and charter costs, and has already tightened effective vessel supply.
Layering Gulf and Hormuz risk on top of Red Sea disruption raises the prospect of further congestion, higher freight rates and additional claims across cargo, hull, P&I, trade credit and political‑risk lines.
