Marine insurers charge war risk premiums after port attacks

Marine insurers charge war risk premiums after port attacks | Insurance Business

Marine insurers charge war risk premiums after port attacks

Shipping and maritime insurers have begun charging war risk premiums in the waters around the Middle East bunkering hub of Fujairah, UAE, following several sabotage attacks on oil tankers last month.

On May 12, four oil tankers were attacked near Fujairah, prompting the Lloyd’s Market Association’s Joint War Committee (JWC) to issue a circular five days later. The circular added the Persian Gulf and adjacent waters, including parts of the Gulf of Oman, to the list of areas under risk of “Hull War, Piracy, Terrorism and related perils,” S&P Platts reported.

Read more: Marine premium hike may follow Saudi ship attacks

According to the JWC, the premium will vary per vessel, and is not automatically added to existing insurance cover.

Neil Roberts, secretary for JWC in the Lloyd’s Market Association, said that “given the circumstances in the Persian Gulf, it would be expected that underwriters are reviewing voyages on a case-by-case basis and acting according to the risk presented.”

According to the S&P Platts report, a shipowner of vessels passing through the Gulf of Oman has said that “our underwriters are already charging [war risk] premium from us.” Meanwhile, Petroleum Association of Japan president Takashi Tsukioka said that Japanese refiners have yet to see an increase in marine insurance rates.

The war risk area was expanded after Saudi Arabia said that two of its oil tankers were hit by a “sabotage attack” off the coast of Fujairah last month. Two other vessels, one UAE-flagged, and the other Norwegian-flagged, were also reportedly attacked.

Fujairah is one of the world’s most important hubs and is located very near the Strait of Hormuz, a critical chokepoint where around 30% of the world’s seaborne oil passes through, making it a strategic location for the oil trade.