As tensions in the Middle East disrupt global shipping routes, insurance has become a critical factor for vessel operators and cargo owners. George Grishin, chairman of UK-registered Lloyd's insurance broker Oakeshott Insurance Group, spoke with Argus on 13 April about how the shipping industry is responding to the announcement of a two-week ceasefire, the insurance options currently available, and the potential long-term implications that the US-Iran war could have for relations between shipowners and insurers.
How has the insurance market reacted to the announcement of a two-week ceasefire?
The announcement briefly encouraged insurers to return to the market, particularly for quoting war risk cover for vessels transiting high-risk areas, such as the strait of Hormuz. War risk premiums are extremely sensitive to geopolitical developments, and rates can change daily. A ceasefire needs to be stable and verifiable before insurers are willing to reduce prices or expand capacity. What is really happening is that insurers are reassessing risk in real time, and in some cases, they simply cannot accept it.
There were reports that insurers withdrew cover entirely during the escalation. Is that accurate?
Not exactly. Much of this confusion comes from a misunderstanding of different types of marine insurance.
Physical damage to vessels and cargo is covered by hull and machinery (H&M) or war risks insurance. Protection and indemnity insurers (P&I) cover a shipowner's third-party liabilities, not damage to the ship itself. Typical P&I cover includes third-party liabilities, such as crew injury or pollution, for example. War risk insurance for physical damage has remained available in many cases, but often at a higher cost and with tighter conditions.
How does war risk insurance work when a region is classified as high-risk?
Once an area is listed by the Joint War Committee (JWC), war risk cover for calls in that area is automatically excluded. Shipowners or cargo owners then have to buy additional cover for specific voyages or periods, typically priced as a percentage of the vessel or cargo value and valid for just seven days. This applies to ports as well as sea passages.
The most recent expansion of the listed areas prior to the current escalation took place in December 2023, when Guyana was added. The list was subsequently updated on 3 March 2026, with the inclusion of several countries that had not appeared on it for many years — Bahrain, Djibouti, Kuwait, Oman and Qatar. At the same time, the geographical scope was widened to cover parts of the Persian/Arabian Gulf, the Gulf of Oman, parts of the Indian Ocean, the Gulf of Aden and the southern Red Sea.
What kind of costs are shipowners facing today?
Additional war risks premium (AWRP) levels for tankers and bulk carriers stood at around 1pc on 13 April with a 35–50pc no claim bonus (NCB) applied to vessels remaining in the Mideast Gulf. NCB is a discount given by insurers if no claim is made during the period of cover. AWRPs for H&M in the Gulf of Oman and in the Bab el-Mandeb strait were reported at around 0.5pc and 0.75pc, respectively.
Passage through the strait of Hormuz is considerably more complex. At one point during the ceasefire discussions, insurers quoted around 3pc of value for a single passage for a seven-day period on 10 April, but those quotes were quickly withdrawn.
Why is the strait of Hormuz particularly difficult to insure?
The probability of an incident is simply too high, especially for vessels carrying oil or gas. Insurers have to price risk based on probability, and in some scenarios the likelihood of a vessel being hit could be extremely high. Charging higher premiums of, for example, 25–50pc of vessel value would theoretically reflect that risk, but such rates are commercially unviable, no shipowner could afford them. In those cases, insurers may refuse to quote altogether.
Are all vessels treated the same from an insurance perspective?
No. Flag, ownership, and cargo type matter enormously. Indian- and Chinese-flagged vessels have faced fewer restrictions in recent weeks, and container ships and bulk carriers are generally seen as lower-risk than tankers. Insurers also scrutinise ultimate beneficial ownership (UBO) and compliance very carefully before offering cover.
Why do some owners still insure vessels that are stuck in port?
This is where the London Blocking and Trapping Addendum becomes important. It extends war risk cover to situations where a vessel is unable to leave a port or waterway for a continuous agreed period, typically six or 12 months, due to war-related closure. If that period is exceeded, the vessel can be treated as a total loss, even without physical damage.
Does blocking and trapping insurance require a separate policy?
No. It is an extension of existing war risk cover. It costs more, but it protects against long-term immobilisation rather than just physical damage. This type of cover proved crucial for vessels trapped, for example, in Ukrainian ports in 2022–23, where some owners eventually received full compensation for their ships.
Could recent events change the relationship between shipowners and insurers?
Yes. Trust has been strained, particularly when owners see insurance becoming unavailable just when they need it most.
But insurers face their own constraints — they cannot price risk at levels that are mathematically accurate but commercially impossible. The long-term challenge will be finding a sustainable balance between affordability and realistic risk pricing in an increasingly unstable geopolitical environment.
What needs to happen for insurance conditions to improve?
Time and clarity. Insurers need a longer observation period to assess whether a ceasefire is genuinely holding. Only then will premiums stabilise and capacity return. Until that happens, insurance will remain costly, selective, and highly conditional.
