War risk insurance costs have jumped by as much as 60% amid heightened instability in the Middle East. The surge is no surprise, but its scale is striking. Premiums reflect the ongoing volatility in hotspots such as the Red Sea, Persian Gulf, and especially the Strait of Hormuz.
Rates in the Strait have climbed from roughly 0.125% to 0.2 – 0.4% of a vessel’s hull and machinery (H&M) value, while ships operating across the wider Gulf now face premiums of 0.5%, up from 0.2 – 0.3%. For VLCCs, this translates into significant daily costs. Even after a temporary ceasefire between Israel and Iran eased premiums slightly, they remain high at 0.35 – 0.45%.
Global cargo premiums reached USD 22.64 billion in 2024, up 1.6% from the previous year, continuing a steady upward trend.
Strategies to Mitigate Rising Costs
- Prioritise Reputable Counterparties
Work only with transparent, established partners. Underwriters closely scrutinise ownership links, and opaque dealings can trigger higher premiums or loss of cover. - Harness Beneficial Ownership Data
Maritime intelligence tools provide ownership visibility, helping verify vessel provenance, avoid sanctions risks, and build insurer confidence. - Adopt Dynamic Route & Risk Intelligence
War risk ratings shift rapidly. Real-time tracking, GNSS jamming alerts, and regional risk data enable smarter routing and reduced surcharges. - Negotiate Bundled Premiums & Fleet Discounts
Fleet-wide or long-term packages can ease premium spikes, especially for operators with multiple vessels. - Integrate Cyber & War Risk Cover
With threats like AIS spoofing and GNSS jamming growing, policies combining cyber and war risk coverage are increasingly vital.
War risk premiums remain elevated, driven not only by physical route hazards but also by sanctions and ownership complexities. To manage exposure, operators must go beyond re-routing: transparency, data-driven insights, and proactive underwriting strategies are now central to keeping costs under control.
