Escalating conflict involving Iran and a spike in direct attacks on commercial container vessels are creating fresh strain on global supply chains and a complex test for marine insurers and cargo markets.
Shaan Burton (pictured), partner at Kennedys, said the war with Iran has reached “critical levels” as reports of vessels being hit by “unknown projectiles” increase. Recent incidents include a Thai‑flagged commercial vessel struck 11 nautical miles north of Oman, causing a fire on board; a Japan‑flagged commercial vessel that sustained minor damage after being hit around 25 nautical miles off the United Arab Emirates coast; and a third commercial vessel struck roughly 50 nautical miles northwest of Dubai.
Burton said this pattern of attacks will “inevitably lead to a considerable strain on the supply chain worldwide”.
In response to the deteriorating security picture, a number of major containership operators have issued notices to cargo interests stating that they intend to treat the carriage as terminated and will instead discharge cargo at a nearby port.
“So what happens when those goods are dropped at a ‘nearby’ port?” Burton asked. It is increasingly questionable what should be regarded as a safe nearby port in the current environment, and there are suggestions that some operators are effectively off‑loading containers without clear justification or rationale for their choice of discharge port.
Aside from the concern of containers and goods being scattered across the region in less‑than‑ideal locations, Burton pointed to additional implications for ports and terminals that will have to absorb unscheduled arrivals and store displaced cargo.
The broad message remains that most ports are open, but there are notable exceptions. Burton noted that some ports in the UAE, Bahrain, Oman and Saudi Arabia have advised that operations are suspended, while others are reporting significant delays.
As rerouting accelerates, there are already signs that ports will begin to experience “vessel bunching” as ships take alternative routes and make unplanned calls. Major hubs such as Singapore and Rotterdam are already reporting that they are feeling the strain as they absorb redirected cargo.
Burton warned that increased container traffic at particular ports is likely to lead to delays in unloading vessels, higher labor costs and a shortage of suitable storage. It is highly likely this will, in turn, produce more claims for loss and/or damage to cargo sitting on the quayside, particularly where ports cannot provide adequate storage.
Whether those losses can be recovered from vessel owners will depend on the contractual terms between owners and shippers, Burton added. Similarly, recovery under cargo policies will depend on the cover in place. Many of the claims may be for losses due to delay – an excluded peril under ICC (A), Burton noted.
Additional claims are also expected from ports and terminals themselves. Most ports and terminals will be insured through local or regional markets, so responses will depend heavily on the wording of those covers.
The incidents highlighted by Burton sit within a rapidly evolving Middle East risk landscape.
Analysts at Moody’s have previously underlined that the Persian Gulf and Strait of Hormuz remain “a key shipping route to export oil and gas,” with vessels insured and reinsured across the global marine market. They warned that around 1,000 vessels have been trapped in the Gulf in earlier phases of the crisis, with the value of those ships alone estimated at around US$25 billion, and some market estimates rising to US$40 billion or more.
While the wider global insurance industry is viewed as capable of absorbing such losses, Moody’s emphasized that marine insurance is “a much more concentrated market,” meaning a large regional event could be particularly significant for that segment.
Market commentary has also pointed to war‑risk premiums on some high‑risk routes rising from around 0.4% of a vessel’s value to as much as 1%, in addition to elevated fuel and charter costs for longer rerouted voyages.
War perils have climbed sharply up corporate risk agendas. Allianz’s latest Risk Barometer notes that political risks and violence have moved to seventh place globally, and that business assets have seen a 22% jump in exposure to conflict areas, following an almost 90% rise in areas affected by armed fighting over the past five years. Within that category, war perils are cited as “a big fear in 2026,” attracting 53% of the votes in the survey’s political risk and violence section.
For Gulf insurers, war risks are typically excluded from standard policies and written instead through specialist war or political‑risk markets. Moody’s analysts have said that, in many cases, the main near‑term impact of Middle East conflict on regional insurers is more likely to come through their investment portfolios than through direct claims, given the extent to which war perils are carved out of standard underwriting.
Meanwhile, longer voyages, use of alternative routes and ad hoc port calls all increase operational exposure while making it harder to monitor accumulation. Burton’s concerns about containers being dropped at “nearby” ports without clear rationale also raise questions for insurers around reasonableness, deviation and the interpretation of contractual liberties in voyage clauses.
With more cargo potentially sitting in congested or ill‑equipped ports, there is scope for a rise in attritional losses. Whether such losses fall on shipowners, ports, cargo insurers or war markets will turn on detailed wording and on how closely the facts can be linked to insured perils rather than pure delay.
Burton stressed that most ports and terminals are insured in local or regional markets, with many of those programs ultimately reinsured into the international market. As the Iran conflict disrupts routing and concentrates cargo in new pressure points, marine and reinsurance underwriters will be watching closely for signs that localized operational stress is starting to translate into a broader claims trend.
