Insurers Pull War Risk Coverage in Persian Gulf as Regional Tensions Escalate
LONDON – A significant bloc of the world’s leading maritime insurers has moved to suspend war-risk coverage for ships navigating the Persian Gulf and nearby waters, a direct response to escalating military tensions involving Iran, the United States, and Israel. The suspension takes effect from 00:01 London time on March 5, according to industry notices reviewed by Bloomberg.
The decision, issued by seven of the twelve members of the influential International Group of P&I Clubs, means coverage will automatically lapse for vessels in the designated high-risk zone. While other aspects of marine insurance remain intact, the withdrawal of war-risk protection leaves shipowners exposed to potential losses from conflict, terrorism, or piracy in one of the world's most strategic shipping lanes.
"This is a precautionary but stark signal to the market," said a senior London underwriter who spoke on condition of anonymity. "The underwriting community is effectively drawing a red line on risk exposure as the situation in West Asia becomes increasingly volatile."
The clubs withdrawing coverage include the American Steamship Owners Mutual P&I Association, Assuranceforeningen Skuld, Gard, the London P&I Club, NorthStandard, the Steamship Mutual Underwriting Association, and the Swedish Club. The affected area encompasses the Persian Gulf, parts of the Gulf of Oman, and waters near Iran’s maritime border with Pakistan.
Broader Impact on Global Trade
The Strait of Hormuz, nestled within this region, is a chokepoint for approximately one-fifth of the world's seaborne oil trade. Analysts warn that the insurance pullback could lead to increased shipping costs, route diversions, or a slowdown in traffic, potentially exerting upward pressure on global energy prices.
The move follows a similar announcement by India's state-owned General Insurance Corporation (GIC), which has terminated hull war-risk cover for a list of high-risk areas including the Persian Gulf, Pakistani and Iranian waters, and sections of the Black Sea and Red Sea. GIC stated that merely transiting through or docking in these zones would now constitute a breach of warranty.
This coordinated retreat by insurers underscores the growing unease in maritime and financial circles over the stability of West Asia. It presents shipowners with a difficult choice: operate in the region without crucial war-risk protection, seek vastly more expensive coverage in the specialist market, or reroute voyages entirely.
Reaction from the Industry
We asked shipping and trade professionals for their take on the insurers' decision.
"This was an inevitable, risk-based calculation," said Michael Thorne, a veteran chartering manager based in Singapore. "The clubs have a duty to their members. When kinetic action becomes a daily headline, they must mitigate their exposure to catastrophic claims. It will complicate logistics, but the trade will find a way—it always does."
"It's a reckless overreaction that will hurt global commerce," countered Anya Petrova, a shipping analyst in Athens, her tone sharp. "This collective withdrawal feels like a panic button. It amplifies the crisis and punishes neutral merchant vessels for geopolitical conflicts they have no part in. It's a gift to alternative routing and will line the pockets of niche insurers charging exorbitant premiums."
"The practical effect is immediate uncertainty," added David Chen, a logistics coordinator in Hong Kong. "Our clients are now asking for contingency plans and cost breakdowns for alternative routes around the Cape of Good Hope. The supply chain, still recovering from recent disruptions, does not need this new friction."