Industry bodies continue to reassure the market that war risk insurance cover remains available, even as the escalating conflict in the Middle East drives shipping through the Strait of Hormuz to a near standstill.
Coordinated US and Israeli strikes on Iran began on February 28, followed by retaliatory Iranian missile and drone attacks across the Gulf. The conflict has disrupted one of the world's most critical shipping lanes, through which roughly 20% of globally consumed oil transits.
Multiple vessels have been damaged, at least one seafarer killed, and around 150 ships stranded.
Several P&I clubs, including Gard, Skuld, NorthStandard, the London P&I Club, and the American Club, issued notices of cancellation for war risk cover effective March 5.
IUA chief executive Chris Jones said insurers have "well-established risk management processes and policy protections to manage war risks and ensure that trade can continue to flow."
He noted that the IUA and Lloyd's Market Association jointly engage security consultants to advise underwriters on areas of heightened risk.
Jones acknowledged the Persian Gulf is "currently an area of maximum risk severity" but stressed that insurance remains available, including for vessels transiting the Strait of Hormuz.
The aviation sector also has protocols in place, he said, with insurers working alongside brokers and airlines to support flights "when it is safe to do so."
IUMI struck a more cautious tone, warning that short-term supply chain disruptions across the Middle East are likely. The body said the marine insurance community is closely monitoring the free passage of shipping in the Persian Gulf and Red Sea.
War risk cover remains available on a single-voyage basis, IUMI said, provided navigation is authorised by governments and flag states. A Notice of Cancellation "does not, necessarily, end the cover," the body noted, adding that "war cover remains available for owners and operators wishing to take it."
IUMI said its members primarily provide property insurance for hull, machinery, and cargo, while liability cover is typically handled by P&I Clubs.
The reassurances come against a backdrop of rapidly escalating costs. Marsh reported war risk rates climbing to 1.25% of a vessel's value as of Tuesday, up from about 0.25% the prior week. For a US$100 million tanker, that translates to a leap from roughly US$250,000 to over US$1 million per voyage.
Jeremy Nixon, CEO of container carrier Ocean Network Express, estimates around 10% of the global container fleet is now caught up in the bottleneck. Linerlytica reported 132 container ships with a combined capacity of 458,000 TEU trapped in the Persian Gulf as of Monday.
Brent crude rose by up to 13% to US$82 per barrel following the initial strikes, while LSEG data showed benchmark freight rates for Very Large Crude Carriers hitting a record US$423,736 per day.
JPMorgan analysts estimated that vessels in the Gulf collectively require some US$352 billion in maximum insurance coverage, far exceeding what private markets are currently providing.
