4th March 2026
1.Executive Summary
Significant and rapid changes have occurred in the marine insurance market following the escalation of geopolitical tensions involving Iran, the United States, and Israel. Major war risk insurers and P&I Clubs have issued formal 72-hour cancellation notices withdrawing certain non-mutual war risk covers across Iranian waters, the Persian/Arabian Gulf, the Gulf of Oman, and adjacent defined areas, with effect from 5 March 2026.
The withdrawal of cover is already causing widespread market disruption, escalating freight costs, delaying vessel movements, and increased contractual and operational risk for parties engaged in regional trade and charterparty arrangements.
2.Background and Geopolitical Context
In recent days, conflict in the region has intensified sharply following U.S. and Israeli strikes on Iranian targets, with Iran responding with by retaliatory action. This has resulted in damage to at least 5 tankers, two reported fatalities, and serious navigational risks in and around the Strait of Hormuz — a critical maritime chokepoint through which nearly one-fifth of global oil volumes transit.
Shipping data indicates an approximately 70% drop in vessel traffic through the Strait as of late Saturday, as leading operators have suspended Hormuz transits, rerouted vessels, or directed ships to designated holding areas. Over 150 vessels (including crude and LNG carriers) have anchored in Gulf waters outside the Strait due to the heightened threat environment, while cargo bookings to the Middle East have slowed or paused.
This sharp increase in operational risk has forced insurers and reinsurers to reassess exposure and initiate widespread cancellations.
The security situation in the region has deteriorated rapidly, with the IRGC declaring the Strait of Hormuz “closed” and warning that any vessel attempting transit would be “set ablaze”. In the same period, the Honduran-flagged Nova was reported burning after being struck by two drones, adding to the escalating list of maritime casualties. Further incidents over the last 48 hours include confirmed damage to the Stena Imperative (resulting in one fatality), MKD VYOM (one fatality), and the Hercules Star following projectile or aerial impacts in Gulf and Omani waters. The resulting disruption is extensive: approximately 10% of the world’s container fleet is now affected by regional congestion and vessel backups, reflecting the broader spread of operational delays beyond tanker trades. This instability is also extending into adjacent maritime corridors, with major carriers activating contingency routing around the Bab el-Mandeb and the southern Red Sea in response to increased retaliatory targeting risks in those waters.
3.Insurers’ Cancellation Notices
3.1.WhoIsCancelling?
Leading insurers and P&I Clubs have issued 72-hour cancellation notices for certain non-mutual war risk covers within the Persian/Arabian Gulf and Gulf of Oman — including Charterers’ Liability, Fixed Premium P&I, and non-poolable extensions — effective from 00:00 hours GMT on 5 March 2026 — include:
- Gard
- Skuld
- NorthStandard
- London P&I Club
- American Club
- Steamship Mutual
Additionally, MS&AD (Japan) has suspended underwriting of war risk policies in the region.
Effective Dates and Regions Affected
- Notices issued: 1 March 2026
- Cancellation effective: 00:00 GMT on 5 March 2026
- Coverage withdrawn for: -Iranian coastal waters (up to 12 nautical miles) — Persian/Arabian Gulf Gulf of – Oman and adjacent defined waters Full exclusion boundary line now confirmed, extending from Cape al-Hadd (22°42.5’N, 59°54.5’E) to the Iran-Pakistan border (25°10.5’N, 61°37.5’E)
3.3 Reinsurance Pressure
Reinsurers have significantly reduced capacity for war risk exposure, compelling insurers to issue 72-hour cancellation notices pursuant to policy terms.
4.Market and Operational Impact
4.1Vessel Movements
- Vessel operators are suspending or rerouting transits through high-risk waters. Tankers are clustered off Iraq, Saudi Arabia, and Qatar.
- Some vessels are now going dark (AIS off) or reversing course to reduce targeting exposures.
- Traffic disruptions now extend beyond Hormuz into the Red Sea corridor. Shipping through the Strait of Hormuz has slowed significantly, with vessels clustering off Iraq, Saudi Arabia, and Qatar.
- Cargo bookings to the Middle East have paused.
4.2Freight and Insurance Cost Inflation
- Oil shipping rates to Asia are at six-year highs and continue to rise.
- War risk premiums have increased by 50% or more, in many cases doubling.
- For a USD 100 million VLCC, voyage premiums have reportedly increased from approximately USD 250,000 to USD 400,000.
- Brent crude has risen by an estimated 7–13% due to supply fears.
5.Legal and Contractual Considerations
5.1 CharterpartyProvisions
- War risk clauses and allocation of additional premiums
- Safe port warranties (critical given IRGC closure threats)
- Force majeure provisions
- Deviation and suspension rights
- Delay exposure and potential frustration arguments from prolonged disruption
5.2 Insurance Arrangements
- Whether cancellation notices have been received under existing policies
- Whether alternative cover is available (subject to significant premium increases)
- Obtaining prior written confirmation from underwriters before entering potentially targeted or excluded areas
5.3 Compliance and Disclosure
Changes in operating risk may trigger reporting obligations to financiers, P&I Clubs, and cargo interests. Financial and insurance covenants under loan documentation may also be engaged.
6. Recommended Client Actions Immediate Steps
- Review all active voyages and upcoming voyages for exposure to excluded zones.
- Confirm receipt of cancellation notices with brokers/insurers.
- Evaluate contractual risk, particularly war risk cost allocation.
- Liaise with charterers and cargo owners regarding routing adjustments.
- Liaise with insurers and brokers regarding alternative cover, acknowledging higher premiums and restricted capacity.
Strategic Considerations
- Build additional time and cost contingencies into voyage scheduling.
- Strengthen operational security protocols for crew and vessel movements.
- Assess long-term supply chain exposure to Gulf-based routes.]
- Consider contingency planning for Red Sea / Bab el-Mandeb diversions
7. How We Can Assist
We can support by:
- Reviewing policies and cancellation notices
- Advising on charterparty rights and obligations under increased war risk conditions
- Drafting notifications to insurers, brokers, and counterparties
- Supporting communications with insurers, financiers, and charterers
- Providing tailored strategic risk assessments for your fleet and supply chain
For further information please contact:
Rea Metropoulou, COZAC Law Offices, Athens E: Rea.Metropoulou@cozac.gr M:+306944915232
Paul Wordley, Wordley Partnership, London
E: Paul.Wordley@wordleylaw.com
T: 07774 817 750
Costas Frangeskides, Wordley Partnership, London
E: Costas.Frangeskides@wordleylaw.com
M: 07812 192627
Disclaimer
This briefing is provided for general informational purposes only and reflects publicly available information and market reports as at 4 March 2026. The situation described is evolving rapidly, and facts, market conditions, and insurance positions may change at short notice.
This document does not constitute legal advice and should not be relied upon as such. Specific advice should be sought in relation to particular circumstances, contractual arrangements, insurance policies, or voyages.
We accept no responsibility for actions taken or not taken on the basis of this briefing without prior consultation.
