Cargo insurers across global markets remain committed to supporting trade flows, including in the Persian Gulf and Red Sea. Although the evolving situation in the Middle East has prompted adjustments-particularly in war risk pricing and policy structures-significant capacity is still available. Many insurers are continuing to provide cover through established mechanisms, including cancellation and reassessment provisions, allowing for flexibility as conditions change.
The global hull insurance market has remained outwardly stable, backed by resilient shipping demand and strong freight earnings. Even as geopolitical tensions reshape trading patterns, particularly around key transit routes, insurers continue to provide cover, adapting terms and pricing where necessary to reflect evolving risks.
In the offshore energy sector, insurance capacity remains widely available. Recent escalation in the Middle East, including impacts on energy infrastructure and supply flows, has introduced additional uncertainty into global markets. Nevertheless, insurers continue to provide cover supporting energy production and transportation activities worldwide.
Liability underwriters have adjusted the way their non-poolable and charterers exposures are placed. Most of those contracts were moved to that basis, but there was no change to the provision of cover under the main International Group of P&I Clubs (IG) programs as those are non-cancellable.
From an Australian perspective, insurers have been issuing notices of cancellation regarding war risks on marine insurance policies, focusing on defined areas in the Middle East. This has been mainly for marine cargo policies, as most blue water vessels that operate here are owned and insured outside of Australia or do not need to enter the defined areas. The marine cargo insurance market activity has been limited, to date, due to the low volume of shipments moving through those areas since the conflict began. When cover is being requested by insureds and their brokers, some insurers are willing to offer coverage at suitable terms for existing insureds, while others are declining at this stage.
Marine liability coverages are not typically involved in exposures to the region, but where they are, the insured is usually entitled to exclude or limit liability for war. It is encouraged that those involved with shipments in and around the affected regions engage with their insurance broker and insurer at the earliest opportunity. This will enable consideration of existing coverage and what the options are in terms of reinstatement of war risks where the cancellation has been applied.
In summary, despite the complexities introduced by Middle East conflicts, the marine insurance industry continues to adapt and provide necessary coverage, ensuring the stability and continuity of global trade.
