By Matthew Sellers
War risk cancellation notices issued earlier this week by marine insurers formally take effect today, marking a shift from rising premium warnings to actual coverage withdrawals in the Gulf region.
The move follows escalating tensions after Iran’s Islamic Revolutionary Guard Corps (IRGC) declared the Strait of Hormuz “closed,” prompting insurers to activate standard 48- and 72-hour war cancellation clauses embedded in hull and cargo policies.Several maritime insurers confirmed they were cancelling war risk cover in the Gulf, citing heightened hostilities and navigation threats.
The fact that those cancellations now come into force changes the practical position for shipowners transiting the region. Until today, existing policies remained in place during the notice period. From now on, vessels without replacement arrangements may find themselves operating without automatic war risk protection.
Earlier reporting by Insurance Business noted that Nordic marine insurer Skuld had issued a 72-hour cancellation notice and that brokers were warning of potential 25% to 50% increases in hull war rates as capacity tightened. At that stage, the story centred on pricing pressure and reinsurer retrenchment. With the notice period expiring, the issue shifts to availability and operational continuity.
The Strait of Hormuz handles roughly one-fifth of global seaborne oil trade, according to the U.S. Energy Information Administration (EIA), making it one of the world’s most strategically important maritime chokepoints. Even absent a confirmed physical blockade, insurance withdrawal increases the economic friction of transit.
War risk cover is typically required under loan covenants, charterparty agreements and cargo contracts. Without it, vessels may be unable to load, discharge or finance voyages through designated high-risk zones. Shipowners now face the prospect of securing voyage-specific cover at materially higher rates or reconsidering sailings through the Gulf until pricing stabilises.
Marine brokers contacted by multiple outlets have indicated that underwriters are selectively offering replacement capacity at sharply revised premiums, reflecting both geopolitical uncertainty and aggregation exposure. Reinsurers have also been reassessing their appetite for concentrated war risk accumulation in the region, contributing to upward pressure on pricing.
The implications extend beyond marine insurance. Tanker operators generally pass elevated war premiums on to charterers, who in turn incorporate those costs into delivered crude pricing. While insurance alone does not determine energy markets, sustained increases in war risk rates can feed into freight benchmarks and, ultimately, energy costs.
This development follows a broader wave of market responses across specialty lines. Insurance Business previously reported on activation of major event response mechanisms and tightening conditions across marine, aviation and trade credit as Middle East instability deepened. Today’s war risk cancellations represent the first concrete implementation phase in marine coverage.
For insurers, the use of war cancellation clauses is not unprecedented. Such provisions are standard in marine policies and are designed precisely for situations where hostilities materially alter risk profiles. What is notable is the speed at which notices were issued and the scale of tonnage exposed in a region that underpins global energy flows.
Market participants say the next variable will be duration. If tensions de-escalate, capacity could return quickly and premiums moderate. If instability persists, higher war risk pricing may become embedded in Gulf trading patterns.
For now, the market has moved from warning to execution. War risk cover in the Gulf is no longer simply more expensive — in many cases, it has formally been withdrawn, forcing shipowners and energy traders to reassess their exposure from today onward.