Maritime transport companies in disputed waters are facing higher requirements for war risk insurance coverage and legal complexities. This issue has arisen due to the increase in attacks in several military conflicts and sanctions that threaten to delay responses to maritime incidents.
Increase in Attacks and Change in Risk Areas
With the rise in the number of attacks on ships in the Iran-U.S., Houthi-Saudi, and Russia-Ukraine conflicts, Neil Roberts, head of the marine and aviation division of the Lloyd's Market Association, stated that changes in war risk areas in the London market reflect the evolving threat landscape. He pointed to significant attacks occurring outside previously listed areas.
Insurance Costs and Impact on Energy Prices
The increase in insurance costs means that more voyages are subject to additional insurance expenses. According to assessments, the additional war risk premium for crude oil shipments from the Black Sea rose from $2 per barrel on July 17 to $3.7 on July 29, before decreasing to $2.9 on September 30.
Roberts also mentioned that changes in the list of risk areas have made it necessary to communicate with insurers before entering designated locations. He emphasized that if an area is on the list and a ship intends to go there, it must inform its insurer to maintain insurance coverage.
Complexities of Sanctions and Environmental Impacts
Roberts noted the increasing operational risks for the transport industry due to the rising number of sanctioned vessels. For instance, as of August 31, 1,226 oil tankers and LPG carriers have been sanctioned, primarily due to their connections with Iranian or Russian trades.
These sanctions complicate responses to maritime incidents and can lead to delays in rescue operations and pollution responses. If one party is sanctioned, responders must obtain government permits before undertaking specific activities, which may prolong the process and increase damages.
Challenges of Innovation and Technology in the Transport Industry
In addition to geographical risks, Roberts stated that shipowners will face new challenges in insurance and liability as they strive to reduce carbon emissions. Future technologies such as nuclear power may ultimately require changes to existing liability frameworks.
Roberts emphasized that there is a need to reassess existing conditions in insurance, as most of them do not include nuclear power.
