The escalating conflict in the Middle East has created one of the most rapidly shifting marine insurance environments in recent memory. Here is what is happening, what it means for coverage, and where things stand today.
What Changed
Following U.S. and Israeli airstrikes on Iran in late February, the Islamic Revolutionary Guard Corps (IRGC) declared the Strait of Hormuz "closed" and threatened to attack any vessel attempting to transit. The insurance market responded immediately. Major war risk providers canceled existing war risk cover for vessels in the region.
The London Market Is Still Open
Despite the cancellations, coverage has not disappeared. Marine insurers in London continued to offer cover in the Middle East even as war risk premiums rose, with capacity remaining available through Lloyd's for clients actively seeking it.
The cost, however, has changed significantly. War risk premiums climbed as high as 1% of a vessel's value within 48 hours, up from roughly 0.2% the week prior. On a $100M vessel, that translates to a single-voyage premium jumping from approximately $200,000 to $1 million. The Joint War Committee also expanded its high-risk zone to include waters around Bahrain, Djibouti, Kuwait, Oman, and Qatar, meaning the affected area now extends well beyond the strait itself.
What's Driving the Pricing
There is no single rate to quote. Increases depend on vessel type, cargo, and routing, requiring individual risk assessment. War risk ratings are now shifting daily in response to geopolitical developments, which makes real-time underwriting guidance essential.
LIG Marine Underwriting
This is a complex and fast-moving situation, but it is a navigable one. As a Lloyd's broker with direct access to the London market, our team is actively monitoring developments in the Gulf and working with agents and brokers to identify coverage solutions for clients with exposure in the region.
Contact us: (727) 578-2800 | Ask@LIGMarine.com
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