Stemming the Tide of War Insurance Costs
War risk insurance costs have soared by up to 60 percent due to recent escalated Middle East tensions. Is this increase surprising? No. Is it substantial? Yes, writes Saleem Khan, Chief Data and Analytics Officer, Pole Star Global, in his guest contribution on finews.asia.
The increase reflects heightened volatility in regions like the Red Sea and Persian Gulf, particularly around the Strait of Hormuz. For instance, premiums in the Strait area rose from approximately 0.125 percent to 0.2-0.4 percent of a ship’s hull and machinery (H&M) value, translating to hefty increases.
Meanwhile, vessels servicing the broader Middle East Gulf have seen premiums climb from 0.2–0.3 percent up to 0.5 percent, adding extra daily costs for VLCCs. And, although a recent ceasefire between Israel and Iran eased rates slightly, dropping back to the high 0.35–0.45 percent range, the volatility persists.
Prioritise Reputable and Transparent Counterparties
One critical strategy is to work exclusively with known, transparent entities. In a climate where war risk premiums are heavily influenced by perceptions of geopolitical exposure, not just by voyage routes, partnering with opaque or sanctions-linked firms can cause underwriters to hike premiums or withdraw cover altogether.
Misaligned ownership can implicate unwitting funding to watch‑listed actors.
Leverage Beneficial Owner Data Tools
The digitisation and digitalisation of various processes and systems across the maritime sector is increasingly prevalent and powerful. This is providing the sector with valuable data and insights upon which to make better decisions for charterers, brokers, shippers, and crew. For example, by using sophisticated and proven maritime intelligence platforms, it is possible for the sector to attain detailed ownership and beneficial owner intelligence.
This kind of visibility enables charterers and brokers to verify their vessel source chain, avoid inadvertent support of illicit actors, and gain underwriters’ confidence – potentially securing lower premiums.
Embrace Dynamic Route Management and Risk Intelligence
War risk ratings now shift weekly, even daily, in response to geopolitical changes. Leveraging real‑time intelligence about these developments and changes – including vessel tracking, GNSS jamming alerts, and regional risk analytics – can help avoid costly detours while vessels travel and further insurance upcharges.
Underwriters sometimes offer fleet-based packages or longer‑period bundling, reducing the per‑voyage cost even in volatile zones. Such arrangements can soften steep premium hikes, especially for operators with multiple vessels. Therefore, it’s worth exploring these options.
Integrate Cyber and War Risk Coverage
The modern maritime threat landscape, marked by AIS spoofing, GNSS jamming, and cyber‑based vessel interference, demands integrated insurance policies that combine war risk with cybersecurity cover. This ensures comprehensive protection against evolving maritime threats.
War risk premiums are climbing. They are staying elevated due to both physical route hazards and the shadow of sanctions, watchlists, and intermediary integrity.
Charterers and brokers can stem the tide and control their exposure, not just by re-routing their vessels and shipments, but by enhancing transparency, deploying forensic ownership data, and actively managing voyages with intelligence-backed insights and smart underwriting strategies.
Saleem Khan brings two decades of senior leadership experience spanning financial services, risk analytics, and data innovation. His expertise includes integrating maritime data into complex risk models, launching and leading data-driven ventures, and steering analytics strategy across sectors to deliver measurable client impact.
Currently, at Pole Star Global, he is driving the expansion of data and analytics offerings to strengthen maritime intelligence and compliance solutions.
