Insurers Scrap War Risk Cover for Ships Sailing Near Iran Amid Regional Tensions

Global marine insurers Skuld and Gard have canceled war risk coverage for vessels navigating conflict zones linked to Iran, a move set to disrupt international trade flows amid escalating regional tensions.

The decision, announced on Monday, reflects the direct impact of ongoing regional conflict on the shipping industry, particularly concerning routes near Iran.

The insurance firms stated on their websites that the cancellation of these vital insurance covers would take effect from Thursday.

The move comes against a backdrop of heightened security concerns in critical waterways, exacerbated by attacks on oil tankers and increased military activity in the region.

The removal of war risk insurance poses a significant challenge for shipping companies, as most vessel charter agreements require this additional coverage for entry into areas designated as high-risk.

The consequences of this action are expected to be far-reaching. Shipping costs are predicted to surge as transport firms seek expensive alternative insurance solutions or reroute their vessels to avoid affected areas.

Furthermore, potential disruptions to energy supplies loom as ship owners may hesitate to sail through the Strait of Hormuz without insurance coverage, fueling fears of a global oil and gas shortage.

The timing of this decision coincides with a period of extreme caution in financial and commodity markets. There is growing apprehension that this measure could further isolate the region commercially, exacerbating global supply chain complexities in the current security environment.