The payout to vessel owners damaged in the Iran War is the second-biggest payout for marine underwriters in over a decade, with around $2 billion in war risk claims since the outbreak of the fighting in the Middle East. According to David Osler, Law & Marine Insurance Editor at Lloyd’s List, this will be offset by heavily enhanced premium income.
Surging War Risk Premiums
War risk insurance premiums for the Strait of Hormuz have surged to between 40 and 60 times pre-crisis levels, with roughly $7 or $8 on the price of a barrel of crude now tied to war risk insurance. The expansion of maritime attacks has led underwriters to extend their list of designated war risk areas 800 kilometers farther up the Saudi west coast on the Red Sea.
Charterers' liability cover now has a blanket exclusion on vessels associated with Saudi Arabia in any way, although ships or charterers with a Saudi nexus can still obtain coverage at a higher cost. The Saudi government is reportedly looking to get a state-backed guarantee scheme in place to bring down these costs for Saudi interests.
Impact on Shipping
The disruption in the Strait of Hormuz has led to a significant increase in war risk premiums, making it more expensive for shipowners and charterers to operate in the region. This has resulted in some operators avoiding direct calls at Saudi Red Sea ports, while others bypass the Red Sea entirely in favor of the Cape of Good Hope, despite the considerably longer voyage.
The situation is being closely monitored by the shipping industry, with the potential for further disruptions and increased costs. As the conflict continues, shipowners and charterers will need to navigate these challenges to ensure the safe and efficient transportation of goods through the region.
As Editor in Chief of The Maritime, I lead content development, interviews, and digital storytelling across our multimedia maritime platform. With over 10 years of experience in the maritime industry, I create and publish in-depth stories and video features that highlight key players, emerging trends, and operational realities across global shipping. Before launching The Maritime, I worked as a Vessel Operator at Imza Marine A.S., gaining hands-on commercial shipping and voyage operations experience. I also served as Marketing Communications Specialist at Gimas Ship Supply & Services, where I managed corporate communication, digital strategy, and industry outreach for shipowners and maritime clients. I hold a Master’s degree in Maritime Transportation Management from Istanbul Technical University and a Master’s degree in Publishing from Marmara University. My work is driven by the belief that the maritime world deserves strong, informed, and accessible media representation. I am committed to sharing the stories of maritime professionals and contributing to the sector’s visibility, knowledge exchange, and future development.
