The marine insurance market has begun responding quickly to the heightened geopolitical tensions in the Middle East, with war risk underwriters taking precautionary steps to manage the evolving risk environment, according to Stephen Rudman, Head of Marine, Asia at Aon. In a reaction note on the current market situation, Rudman said underwriters have started issuing formal notices of cancellation under standard seven-day war clauses for certain annual hull war policies. In addition, some previously quoted Additional Premiums (APs) for vessels transiting through listed high-risk areas are being withdrawn or revised. Where cover is being reinstated, it is often offered at significantly higher rates.
He also noted that insurers are applying greater scrutiny to voyages that pass through or near sensitive maritime zones. In some cases, prior approval may be required before a vessel is allowed to enter such areas. However, Rudman clarified that these actions relate specifically to war risk extensions, while core hull and machinery and Protection and Indemnity (P&I) covers remain unaffected unless otherwise advised. According to Rudman, the hull war insurance market has reacted more rapidly due to its exposure to aggregated losses and capital sensitivity. Additional premiums for vessels sailing through high-risk waters are rising sharply and could continue to fluctuate in the near term.
Cargo war risk coverage, meanwhile, continues to remain available. However, insurance rates are increasing and quotations are being reviewed on a voyage-by-voyage basis, particularly for shipments involving energy products and bulk commodities. Despite the market adjustments, Rudman said there has not yet been a systemic withdrawal of insurance capacity. Instead, insurers are repricing policies to reflect the higher risk profile and the pressures within the reinsurance market. He cautioned that further rate increases may occur if the situation escalates significantly, such as through sustained state conflict or major vessel losses.
