Marine insurance premium rise ‘near certainty’ as hostility escalates over Iran-UK tanker seizure

Insurance premium increases are a “near certainty” for shipping in the region of the strait of Hormuz after Iran seized UK-flagged oil tanker Stena Impero on Friday 19 July.

Jonathan Moss, head of transport and marine at global legal business DWF, called the act “unacceptable and clearly an act of retaliation” following the UK’s seizure of Iranian ship Grace 1 supertanker off the shore of Gibraltar on 4 July.

The UK said the Iranian tanker was bound for Syria in breach of European Union sanctions.

Moss said: "The global insurance markets are accustomed to factoring geopolitical uncertainty into pricing models, nevertheless this geopolitical fallout has not been seen since 2003. In 2003, rates for Hull & Machinery, War Risk cover for tankers in the Persian Gulf increased significantly owing to the political instability in the region.”

Rising tensions as a result of this month’s incidents will continue to have a knock on effect on global fuel prices and insurance premiums.

"In particular, global marine insurers are already closely monitoring the current situation and employ complex risk models. Given the hostility escalating, underwriters will also be closely scrutinising voyages on a case-by-case basis with premium increases covering vessels in the region a near certainty,” he said.

“Ultimately, this uncertainty in the Gulf region is likely to lead insurers to raise premiums, renegotiate terms of cover and introduce riders to Marine and Energy contracts of insurance and reinsurance, in the face of a cocktail of instability in the region."

Over the weekend a radio recording of messages between the crew of the British navy ship HMS Montrose and an Iranian patrol appeared to contradict Iran’s explanation for taking the tanker. Iran said the Stena Impero had hit a fishing boat and did not respond to calls. But in the recording, an Iranian patrol said it wanted to inspect the tanker for security reasons.

UK Prime Minister Theresa May called an emergency meeting of the Cobra committee this morning (22 July) to discuss the security of British shipping in the Gulf.

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

More of today's news

RSG expands products and geography with new office in Spain
Expansion ushers in name change for RSG’s M&A insurance specialist managing general underwriter Hunter George & Partner.

Brit creates head of innovation role and hires insurtech expert
New appointee ‘oversaw the build of five insurtech incubated start-ups and led the seeding of ten investments’.

Darag buys UK-based insurer in run-off as part of expansion plans
The deal will enable Darag to continue to trade ‘seamlessly’ in the UK market post-Brexit.

AXA XL appoints CUO for XL Insurance Company SE
The new CUO has 27 years’ experience in insurance and has been with AXA since 1992. 

Specialty managing general agent signs up tech firm REG to manage global compliance
Tech partnership will ‘simplify and help create efficiencies in our processes and controls’, says MGA COO.

Save £600 with the Intelligent InsurTECH Europe Super Early-Bird rate:  Book now