Ongoing conflict in the Middle East is creating increasing risks across maritime trade and global supply chains, with marine insurance claims rising in both frequency and complexity, according to W K Webster – A Gallagher Bassett company (WKW).
The marine claims specialist said it is already handling cargo claims from vessels affected by recent incidents near the Strait of Hormuz, where ships have suffered explosions and fire damage. Assets deployed to assist stricken vessels have also been targeted by military strikes, with claims expected to span hull, protection and indemnity (P&I), and cargo insurance coverage.
WKW chief operating officer Michael Hird said the operational consequences for cargo carriers are already becoming evident.
“Expect delays to cargo both in transit and awaiting shipment as vessel owners alter trade routes to avoid high-risk areas. We’re likely to see additional freight charges and vessels invoking the right to deviate or deploying force majeure clauses,” Hird said. “This means increased costs for cargo movers and the potential for shipments landing at unintended ports, with cargo then needing to be on-carried to final destinations.”
He added that the downstream effects on supply chains would be considerable. “We will see more frequent losses for time-sensitive cargoes, production downtime, breakdowns in supply contracts, and stock accumulation or shortages,” Hird said.
War risk insurance policies have faced widespread cancellations, with carriers reassessing their willingness to underwrite transits through conflict-affected regions amid heightened crew safety risks. Although war risk cover remains available, particularly through the London market, significant rate increases and revised terms have eroded or eliminated voyage margins for many operators.
WKW chief executive officer Anthony Smith (pictured) said the firm has taken steps to maintain claims service despite the challenging operating environment.
“We are prepared for challenges in deploying surveyors or other experts to certain claims locations or emergency situations. Our global network of local agents ensures that we can respond to and investigate claims thoroughly as they arise,” Smith said.
Smith warned that the situation shows no immediate sign of easing. “Whilst hostilities continue to escalate, we will continue to see impacts widening and losses increasing. WKW will continue to meet the needs of insureds – providing access to immediate, high-quality claims service,” he said.
On Feb 28, Israel and the United States launched a coordinated attack on various sites in Iran. On March 1, the UK insurance market issued a notice of cancellation of war risks insurance to reflect the increased level of risk, with higher additional war risk premium rates now applying to Iran and Iranian waters, the Persian/Arabian Gulf, and adjacent waters including the Gulf of Oman.
Traffic through the Strait of Hormuz has dropped sharply as carriers have pulled back from the waterway, with vessel movements falling by more than 80% compared with typical levels before the conflict. Around 10% of the world’s container ships have been affected by the disruption, with delays and rerouted shipments creating congestion at ports and transshipment hubs across Europe and Asia.
The financial toll on insurers has been significant. War‑risk insurance premiums for vessels transiting conflict‑affected waters have surged several times above pre‑conflict levels, with some hull war risk quotes rising to around 3% of a vessel’s value in current markets – up sharply from fractions of 1% earlier in the crisis. On that basis, insuring a tanker valued at $100m could cost roughly $3m in war‑risk premium alone, depending on vessel type and routing. Analysts at Jefferies estimate that potential industry losses from the seven reported damaged vessels could reach up to $1.75b.
