Marine Insurers Cancel War Risk Coverage Across Middle Eastern Waters

Marine insurers are cancelling war risk coverage for commercial vessels operating in the Red Sea, Gulf of Aden, Indian Ocean, and the Strait of Hormuz following a widening conflict involving Iran, according to shipping industry reports published on March 1 and March 5, 2026. The retrenchment by major protection and indemnity clubs leaves at least 150 vessels stranded or anchored as commercial shipping rates surge to historic highs.

Insurers Cancel War Risk Policies Across Middle Eastern Waters

Companies including Gard, Skuld, NorthStandard, the London P&I Club, and the American Club issued cancellation notices taking effect on March 5, 2026, according to reporting by Reuters and maritime publications. Skuld explicitly cited war risks across parts of the Red Sea, Gulf of Aden, and Indian Ocean, while notices from other major marine insurers excluded coverage in Iranian waters, the Persian Gulf, and adjacent waterways. Japan’s MS&AD Insurance Group also suspended the underwriting of war risk insurance for vessels operating around Iran, Israel, and neighboring countries.

The insurance shake-up follows retaliatory military actions in the region that have damaged at least three tankers, resulted in at least one seafarer death, and trapped approximately 150 oil and liquefied natural gas carriers near the Strait of Hormuz, according to shipping data. Vessels carrying roughly one-fifth of global oil demand from Saudi Arabia, the United Arab Emirates, Iraq, Iran, and Kuwait routinely transit the corridor alongside tankers hauling refined products like diesel and gasoline.

Surging Shipping Costs and Global Market Impacts

The mounting security crisis has sent shockwaves through energy and freight markets, triggering a 9 percent jump in global oil prices. Spot shipping rates for moving crude from the Middle East to Asia—known as TD3C rates—have nearly tripled since the start of 2026, driven by shipowners avoiding the conflict zone. Early trading data showed spot rates for hiring very large crude carriers on the Middle East-to-China route climbed roughly 4 percent, equivalent to at least $12 million per voyage.

“TD3C rates were rising exponentially before the attacks and will continue to remain elevated as countries scramble to meet their energy needs,” said Emril Jamil, a senior LSEG analyst, in reporting published by Reuters. Market analysts note that charterers are increasingly forced to source crude from the United States and West Africa on longer voyages, altering global trade flows and keeping freight rates elevated across alternative shipping lanes.

While Skuld indicated in its notices that it was actively exploring a buy-back option to reinstate war risk coverage for certain routes, widespread market uncertainty persists. Shipbrokers report that loading operations across Middle East routes remain tense as operators evaluate escalating premiums and severe personnel risks.