From the Red Sea to the Strait of Hormuz, overlapping conflicts have disrupted major trade routes and challenged the assumptions on which war risk coverage has long depended. This escalation of geopolitical tensions across the Middle East has placed marine war insurance under sustained strain.
This strain goes beyond elevated risk. The operating environment is becoming more complex and less predictable, reshaping the structure, price and use of global shipping insurance.
A framework built for separation, now under strain
War risk insurance has always operated as a distinct layer, separate from standard hull and cargo cover. This separation reflects a core principle: war risks are systemic, politically driven, and potentially catastrophic, and require dedicated pricing and cancellation mechanisms.
Today’s insurance system relies on long-established clause sets, notably the Institute War and Strikes Clauses for hull (1983) and cargo (2009), underpinned by the Marine Insurance Act 1906. These clauses define not only the risks covered, but also how they are managed geographically, and how policies can be withdrawn or adjusted.
While the underlying language governing war perils is broadly aligned across hull and cargo, important differences remain, notably how losses are triggered and how long coverage persists under disruption.
For hull insurers, prolonged detainment, such as a vessel held by a state or armed actor, can lead to a constructive total loss after 12 months. Cargo, by contrast, has no equivalent threshold and is subject to tighter time limits, with cover typically ending shortly after discharge or arrival.
These differences have always existed, but they matter more now that disruption is prolonged rather than episodic.
Where gaps begin to appear
These existing structures were not designed for sustained, multi-regional disruption.
One example is ‘blocking and trapping’ clauses, where vessels are physically unable to leave a port or region. Hull cover addresses this through an addendum that can eventually lead to a total loss claim after a defined period. Cargo cover, however, offers much less protection, particularly when delays extend beyond the policy period.
Similarly, cargo policies exclude losses resulting from voyage frustration, meaning that delays, rerouting or commercial impracticality caused by war conditions may not be recoverable.
As vessels reroute around high-risk areas, often adding weeks to transit times, these limitations are evident. Deviation from the originally insured voyage can also affect coverage if notification and additional premium requirements are not met.
Together, this results in a growing mismatch between operational disruption and how contracts capture it.
Pricing and geography are shifting again
War risk has always been sensitive to geography, but recent developments have intensified this relationship.
Insurance operates through a two-tier model. First there is a baseline premium for low-risk trading and second, voyage-specific additional premiums when entering designated high-risk zones. Expanding these high-risk zones, particularly following the Joint War Committee’s March 2026 update, has widened the scope of areas requiring additional cover.
Simultaneously, pricing has become more volatile. Additional premiums for voyages through the Persian Gulf and Red Sea have increased significantly compared to pre-crisis levels, with higher rates applied to vessels considered to be more exposed.
Another complication is the emergence of so-called ‘touch point’ risk, where vessels linked, directly or indirectly, to certain countries face heightened exposure. A lack of consistent definitions in the market creates uneven pricing and potential disputes at claims stage.
For operators, this introduces a new layer of uncertainty because risk is no longer defined solely by destination, but by a combination of geography, affiliation and evolving perceptions of exposure.
Accumulation risk is building
Insurers are now focusing more on accumulation risk, the concentration of multiple high-value vessels or cargoes in a single location.
Rerouting away from contested chokepoints has led to congestion at alternative ports, where the aggregation of exposure can approach or exceed insurer capacity. Unlike natural catastrophe modelling, these concentrations can shift rapidly, driven by geopolitical developments rather than predictable patterns.
For cargo insurers, visibility adds another challenge. Goods may be transhipped between vessels mid-journey, making it difficult to track where insured interests are located at any given time.
Taken together, these dynamics push underwriting toward more granular, voyage-specific assessment.
A market adapting, not retreating
Despite these pressures, the marine insurance market has not withdrawn. As confirmed by the International Union of Marine Insurers (IUMI) in March and April 2026, capacity remains available across hull and cargo, but under more selective, case-by-case conditions.
Notices of cancellation, increasingly issued as risks evolve, are not signals of market exit but tools to reset terms and pricing. Coverage for high-risk regions continues, often structured on a voyage-specific basis and subject to scrutiny.
This points to a broader shift. Underwriting is becoming more transactional, with decisions made voyage by voyage and backed by real-time information.
Where the market goes from here
The current disruption shows where the industry may need to evolve.
Legacy provisions, such as detainment thresholds and blocking clauses, were not designed for simultaneous, multi-region disruption of key trade arteries. Legal uncertainty around how these clauses apply in practice could become more pronounced if disruption persists.
The benefits of vessel tracking, geopolitical intelligence and data-led risk assessment are clear. As underwriting decisions become more granular, access to timely and reliable information will be central to both insurers and operators.
Organisations with strong data and classification capabilities, like LR, are well placed to support the market, helping to translate risks into actionable insight. This current volatility tells only part of the story. Persistence is now just as important. If disruption continues, the challenge will be to keep trade moving while making sure the frameworks underpinning it remain robust.
