Despite the military escalation in the Middle East Gulf and the Red Sea, maritime insurers can continue to provide “war cover” – subject to certain conditions.
The International Union of Marine Insurance (IUMI) has issued a statement in response to the ongoing debate about insurance cover in the context of the war between the USA, Israel and Iran. According to the statement, marine insurers are closely monitoring the situation in the Middle East and in particular the safety and free passage of ships in the Persian Gulf and the Red Sea. As with all shipping interests, the safety of seafarers is the top priority for shipping companies.
The situation remains dynamic. Numerous ships are stranded in the Persian Gulf and many shipowners are changing their routes to avoid the risk areas. Insurers want to consider the potential impact on stocks in nearby ports and on ships and crews on their longer sea routes.
A key part of the statement concerns insurance cover: “The granting of war cover for the Persian Gulf and the Red Sea is and will remain possible under specific agreements on a voyage-by-voyage basis,” writes IUMI. However, it restricts that shipping must be approved by governments and flag states in order for cover to be granted. In view of the current fast-moving situation, insurers want to regularly review their options and their willingness to provide this cover.
By way of background, in such cases, some insurers send a notice of termination of their policyholders’ existing cover. This allows the insurer to reassess the risk and then reinstate the insurance cover on adjusted terms. It is important to note that a notice of termination does not necessarily terminate the insurance cover. War cover remains available to owners and shipowners who want it.
It should also be noted that IUMI members (mainly) provide property insurance (hull, machinery and cargo), whereas liability insurance is usually covered by Protection & Indemnity Clubs (P&I Clubs), many of which operate under the umbrella of the International Group of P&I Clubs (IGPC).
