Insurance premiums spike 340%

Marine insurers have sharply raised war-risk charges on ships moving through the Red Sea, Gulf of Aden and Strait of Hormuz, adding new costs to cargo already facing detours and delay. (gcaptain.com) Reuters reported on March 6 that war-risk cover in the Gulf had surged by more than 1,000% in some cases after the conflict widened, while Lloyd’s List reported on March 2 that carriers were also adding war-risk surcharges to customer invoices. Hapag-Lloyd’s surcharge for Middle East Gulf cargo reached $1,500 per twenty-foot equivalent unit, or TEU. (gcaptain.com) (lloydslist.com) The London market’s Joint War Committee expanded and amended its listed high-risk areas on March 3, 2026, covering parts of the Persian or Arabian Gulf, Gulf of Oman, Gulf of Aden and Southern Red Sea, and adding Bahrain, Djibouti, Kuwait, Oman and Qatar. Ships entering those zones can require extra war-risk cover priced by underwriters and brokers trip by trip. (lmalloyds.com 1) (lmalloyds.com 2) War-risk insurance is the extra premium paid when a ship enters an area where missiles, drones, mines or seizures are judged more likely. BIMCO, the shipping industry association, said on March 3 that owners and charterers should review contract terms because security concerns in the Gulf region, Gulf of Oman, Gulf of Aden and Southern Red Sea were changing routing, cargo and crew risk. (bimco.org) The cost jump lands on top of a shipping system already bent out of shape by Red Sea rerouting. UNCTAD said in its 2025 Review of Maritime Transport that ships avoiding the Suez Canal were sailing for weeks around the Cape of Good Hope, while Suez tonnage transit levels by early May 2025 remained about 70% below the 2023 average. (unctad.org 1) (unctad.org 2) The World Bank said vessel traffic through the Suez Canal and Bab el-Mandeb had fallen by three-fourths by the end of 2024, while traffic around the Cape of Good Hope had risen by more than 50%. That longer route burns more fuel, ties up ships for more days and pushes up the landed cost importers pay by the time cargo reaches a warehouse. (worldbank.org) Insurers say the market is tightening, but they dispute claims that cover has disappeared entirely. The Lloyd’s Market Association said in late March that reduced traffic in Hormuz was being driven by safety concerns rather than a blanket lack of insurance availability, even as attacks on commercial vessels and offshore infrastructure kept claims more complex and premiums higher. (lmalloyds.com) (theloadstar.com) Cargo owners face a second problem after the premium itself: standard marine policies often do not pay for delay. The Loadstar reported in March that shippers were being warned to check whether they had separate cover for disruption losses, because war-risk insurance and cargo insurance do not automatically reimburse the cost of late inventory. (theloadstar.com) The result is a chain reaction that starts with a higher insurance quote and ends with fewer route choices, longer transit times and bigger invoices for buyers. As long as ships keep treating the Red Sea and Gulf routes as exceptional-risk passages, those extra costs are likely to stay embedded in freight bills. (unctad.org) (lmalloyds.com)