Several marine insurers have revealed they will cancel war risk coverage for ships operating in Iran and Persian/Arabian Gulf.
Some insurers said their cancellations will take effect from March 5, according to notices dated March 1 on their websites.
Insurers are following closely the concerning developments in Iran and the wider Arabian/Persian Gulf, which have resulted in a materially heightened level of geopolitical and operational uncertainty.
It is already evident that reinsurers’ appetite for war‑risk exposure is tightening, and in practical terms, it will result in reinsurers withdrawing capacity at short notice.
The cancellation takes effect from 0:00 hrs GMT (midnight) on March 5, following the required 72 hours notice.
The notice of cancellation applies to war risk cover only; all other terms of the cover remain unchanged.
War risk cover will be excluded in Iran and Iranian waters including coastal waters up to 12 nautical miles offshore, as well as the Persian/Arabian Gulf and adjacent waters, according to the notices.
Escalating geopolitical tensions and recent security developments in the Strait of Hormuz have renewed focus on the legal and commercial risks associated with transiting one of the world’s most strategically significant maritime corridors.
Any deterioration in the operating environment has immediate implications for freight markets, insurance costs, and voyage planning. In this context, stakeholders are closely examining the impact on charterparty performance, including the operation of war risks provisions, safe port warranties, force majeure clauses, and deviation rights.
In response to the increased tensions following U.S. and Israeli military operations in Iran, insurers have opted to exclude war risk coverage in critical areas of the Middle East. This move has led to significant disruptions, with key shipping routes, notably the Strait of Hormuz, being affected as tanker companies hold back shipments.
Some shipowners are rerouting vessels away from the Strait of Hormuz to reduce risks to crews and cargo, despite the mounting costs and delays they face on already stretched global trade lanes.
Ship-tracking data on Sunday showed a measurable reduction in commercial vessel traffic through the Bab el-Mandeb following escalation, as major container carriers activated contingency routing plans to avoid retaliatory targeting risk in the Red Sea corridor.
Traffic through the Strait of Hormuz slowed, with some Western-affiliated tankers transiting dark or reversing course.
Faced with rising rates and heightened operational risk, some shipowners are now considering longer alternative routes to avoid the Strait of Hormuz, although diverting adds days or weeks to voyages and may not be commercially viable for all trades.
The insurance market posture aligns with the latest assessment from the Joint Maritime Information Center (JMIC), which elevated the regional maritime risk level to CRITICAL.
According to JMIC, confirmed missile and drone attacks against multiple commercial vessels within the Gulf of Oman, Musandam approaches, and UAE coastal waters have shifted the regional maritime security posture from Severe to CRITICAL.
While no formal legal closure of the Strait of Hormuz has been declared, the operational environment reflects active kinetic hazard conditions in this area.
The security situation across the Strait of Hormuz, Bab-el-Mandeb, and the Arabian Sea is expected to remain highly volatile over the next 24 to 48 hours.
While no official legal closure has been confirmed via NAVAREA or IMO channels, multiple reports indicate Iranian forces are issuing VHF hails claiming the waterway is restricted. JMIC said mariners are reporting severe GNSS/GPS interference and disruptions to AIS and communication systems.
Secretary-General of the International Maritime Organization Arsenio Dominguez issued a statement on the situation in the Strait of Hormuz: “I am deeply concerned by reports of at least one fatality and several seafarers injured in attacks on merchant vessels. No attack on innocent seafarers or civilian shipping is ever justified. These crews are simply doing their jobs and must be protected from the effects of wider geopolitical tensions.
“Freedom of navigation is a fundamental principle of international maritime law, and it must be respected by all Parties, with no exception. I am monitoring the situation closely, and I urge all shipping companies to exercise maximum caution. Where possible, vessels should avoid transiting the affected region until conditions improve. I also call on all stakeholders to remain vigilant against disinformation and to rely only on verified, authoritative sources when making navigational decisions.”
