Middle East conflict sends marine insurance costs soaring to record highs
Rising tensions in the Middle East have pushed marine insurance costs to record highs. Ships passing through high-risk zones now face premiums up to 20 times higher than usual. The conflict has also triggered warnings about broader financial risks for insurers if the situation drags on.
Since late 2023, attacks on shipping in the Gulf of Oman have driven up insurance costs sharply. Premiums for vessels in the region have jumped by 300-500% compared to pre-2022 levels, with some transit policies now costing up to $100,000 per day. Around 1,000 ships, worth over $25 billion in total hull value, remain in the Gulf, exposing insurers to potential losses running into hundreds of millions per vessel.
War-risk coverage is mandatory at Lloyd's for ships travelling through areas on the Joint War Committee list, including the Strait of Hormuz. The conflict has already reduced available insurance capacity and increased the risk of overlapping claims. While property damage and cyber policies are unlikely to see major payouts due to war exclusions, trade credit and political risk insurers may face higher claims from energy price shocks or disrupted trade.
Fitch Ratings expects limited direct impact on insurers' ratings if the conflict stays brief and avoids major damage to oil infrastructure. However, a prolonged crisis could still hurt the sector through rising loss costs, falling asset values, and more defaults. Analysts also predict further near-term premium hikes of 25-50% for marine hull insurance in the Gulf.
The surge in marine war-risk premiums reflects growing uncertainty in the region. Insurers are bracing for possible indirect financial strain if the conflict persists. For now, most expect earnings to remain stable unless the situation worsens significantly.
