The granting of war cover for the Persian Gulf and Red Sea is and will remain available under specific agreement on a single voyage basis as long as navigation is authorised by governments and flag states, said the International Union of Marine Insurers (IUMI) in an official statement released yesterday.
The Joint War Committee (JWC), which counts syndicate members from Lloyd's in its ranks, as well as representatives from the London insurance market, has listed the waters around Bahrain, Djibouti, Kuwait, Oman and Qatar as high-risk areas, according to a JWC Circular.
As the war in the Middle East escalates, US President Donald Trump has ordered the US International Development Finance Corporation (DFC) to provide sweeping political risk insurance and unspecified guarantees for maritime trade.
(Re)insurers in the Middle East will be closely monitoring the conflict taking place in the region as it spreads across the countries in the GCC and the Levant region.
The situation across Middle East shipping lanes has escalated sharply, with substantial operational, navigational, and insurance implications for global trade as a result of the military conflict in the region that began on 28 February.
The biggest global repercussions of the ongoing military conflict in the Middle East include the increased risks of terrorism, spikes in reinsurance prices, fluctuations in financial markets and energy prices, and hikes in compensation costs, according to Mr Khaled Abdel-Sadek, a Vice Chairman of the Insurers Federation of Egypt (IFE).
Many of the world's leading maritime insurers have cancelled war risk cover for vessels entering the Persian Gulf, amid escalated military conflict in the Middle East.
Seven of the 12 leading P&I clubs - marine mutual insurance associations established and run by shipowners and related stakeholders - will cease providing war risk coverage for vessels entering the Persian Gulf from the 5th.
The attacks on Iran by the US and Israel, followed by retaliatory strikes by Iran on several countries allied to the US, including the UAE and Saudi Arabia, will have a profound impact on the insurance market at large. India is also likely to be significantly impacted.
The war that broke out in the Gulf region, following US and Israeli strikes on Iran, has led insurers to cancel war risk covers and raise premiums for vessels sailing in the region and transiting the Strait of Hormuz.