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The International Union of Marine Insurers said war risk cover for the Persian Gulf and Red Sea remains available but will be granted only on a voyage-by-voyage basis and subject to continuous review, as insurers respond to an escalating security situation that has already forced multiple vessel operators to alter their routes.
The statement from IUMI, which represents marine property insurers globally, signals a tightening of underwriting conditions rather than a blanket withdrawal of cover. The distinction carries significant commercial weight for shipowners, cargo interests, and freight forwarders whose contracts depend on the continuity of insurance.
Vessels Trapped, Routes Lengthened
The situation in the Middle East has left a number of vessels trapped in the Persian Gulf while a growing number of operators are diverting away from the Red Sea corridor, one of the world’s busiest shipping lanes connecting Asia, Europe, and East Africa via the Suez Canal.
Longer alternative routing, typically around the Cape of Good Hope, adds between 10 and 14 days to voyages and sharply increases fuel and operating costs. For time-sensitive cargo including breakbulk, project cargo, and perishables, the detours carry additional financial and logistical risk.
IUMI warned that the rerouting is creating concentration risk at nearby ports as traffic clusters at alternative hubs, raising the prospect of berth congestion and cargo accumulation that could compound supply chain disruption.
What a Notice of Cancellation Actually Means
A key element of the IUMI statement addresses what the organisation called a widely misunderstood mechanism: the Notice of Cancellation.
Under conditions like those now present in the Middle East, some insurers issue a Notice of Cancellation to existing war risk policyholders. IUMI clarified that this step does not automatically terminate cover. Instead, it gives the insurer a defined window to reassess the risk exposure and then reinstate coverage, typically at adjusted terms and premiums, before the cancellation takes effect.
For vessel operators and cargo owners, the practical implication is that cover may continue, but at a higher cost and potentially with tighter geographic or operational conditions attached.
War risk cover in the region is being offered on a single voyage basis, meaning each transit requires a fresh underwriting agreement. That arrangement is conditional on navigation remaining authorised by relevant governments and flag states.
P&I Clubs Hold the Liability Line
IUMI noted that its membership principally provides property insurance covering hull, machinery, and cargo. Liability cover for incidents involving third parties, crew injury, oil spill response, and wreck removal falls under Protection and Indemnity Clubs, most of which operate within the framework of the International Group of P&I Clubs.
The distinction matters for shipowners assembling a full insurance stack before authorising a transit. Both layers of cover need to be in place, and conditions from each underwriting community may evolve independently as the security environment shifts.
Short-Term Disruption Flagged
IUMI said supply chain disruption in the short term is a likely outcome of the current situation, without specifying a timeline. That assessment aligns with signals already emerging from container lines, breakbulk operators, and project cargo forwarders who have begun adjusting vessel schedules and cargo delivery windows.
Insurers said they would regularly review their ability and willingness to provide war risk cover as the situation develops, language that leaves open the possibility of further tightening or, should security conditions improve, a return to more standard underwriting terms.
For now, the message from the marine insurance community is that cover is available for those who want it, but the price and conditions will reflect a risk picture that remains, in IUMI’s own words, fluid.
