Twenty million dollars. That is what brokers said in early October 2026 a single supertanker voyage into the Persian Gulf could cost in additional war risk premium, with rates of 6% to 10% of the ship’s hull value, as the Financial Times reported and Insurance Business repeated. Before the conflict involving the United States, Israel and Iran began at the end of February 2026, the same cover cost about 0.25%, according to Marcus Baker, global head of marine at the broker Marsh.
That premium does not stay with the shipowner. It moves into charter rates, freight surcharges and cargo insurance, and in the end into the price of what the ship carries. This guide explains how war cover works, how the extra premium is set, what the protection and indemnity (P&I) clubs do and do not cover, and who pays in the end. It deals only with the commercial side of these risks. Data as of November 2026.
What is war risk insurance in shipping?
A separate policy for perils that ordinary marine insurance leaves out. A ship’s standard hull and machinery cover pays for physical damage from fire, collision, grounding or heavy weather, but it excludes war, strikes, terrorism, piracy and similar perils. Owners buy those back from war risk underwriters, mostly in the Lloyd’s market or through specialist mutual war associations.
The cover usually runs for a year and lets the ship trade worldwide, with one exception: areas the market considers dangerous. In London these are set by the Joint War Committee, which brings together underwriters from Lloyd’s and the International Underwriting Association. On March 3, 2026 the committee issued a revised list, JWLA-033, which added Bahrain, Djibouti, Kuwait, Oman and Qatar and redrew the boundaries of the Gulf, the Gulf of Oman and the southern Red Sea, as MaritimeCyprus reported. A ship heading into a listed area must tell its underwriters first and pay an additional premium for that voyage.
How is the additional war risk premium calculated?
Diagram: Portolan, based on Marsh, Howden Re, Lloyd’s Market Association and broker quotes reported by S&P Global and Insurance Business, 2026
As a percentage of the ship’s insured hull value, quoted for a single transit or a short period, often seven days. The rate depends on the area, the ship’s type, flag and ownership, and the latest incidents, and quotes can change from one day to the next. In January 2024, as attacks spread in the Red Sea, underwriters shortened the time their quotes stayed open, “with 24 hours being the norm,” Munro Anderson of Vessel Protect told Reuters.
The arithmetic is simple and the sums are large. For a ship insured at $100 million, a rate of 0.25% means $250,000 for one voyage; 3% means $3 million; 10% means $10 million, by our calculation. The broker Howden Re gave the same order of magnitude in March 2026: about $250,000 per journey for a $100 million vessel before the conflict.
Table 1. Additional war risk premium for ships entering the Persian Gulf, 2026
| Period | Premium, % of hull value | Source |
|---|---|---|
| Before late February 2026 | about 0.25% | Marsh, via Insurance Business, October 2026 |
| March 2026 | 2-3%, up to about 5% at the peak | Howden Re, March 26, 2026 |
| After the US-Iran memorandum of June 2026 | about 2% | Lloyd’s Market Association, via Insurance Business |
| Late July 2026 | 7.5-10% | Marsh, via S&P Global, July 22, 2026 |
| Late August 2026 | 3-8% | Insurance Business, October 2026 |
| Early October 2026 | 6-10% for tankers | brokers via the Financial Times, October 2026 |
Source: as listed in each row. Rates are indicative market quotes; actual premiums depend on the ship and the voyage.
For comparison, the Red Sea premium peaked at a far lower level. In January 2024 it rose from about 0.7% to about 1% of hull value, according to insurance sources quoted by Reuters, and in July 2026 Marsh put it at 0.5% for a transit of the Bab el-Mandeb.
What do P&I clubs cover?
Liabilities to other people. Protection and indemnity insurance pays for injury and death of crew and passengers, damage to cargo, oil pollution, wreck removal, collision damage to other ships and damage to docks and other property, according to the International Group of P&I Clubs. It is written by mutual associations, or clubs, owned by the shipowners they insure.
Twelve clubs belong to the International Group, and together they cover about 87% of the world’s ocean-going tonnage, the group says. Each club pays the first $10 million of any claim itself; above that, the clubs share claims through a pooling agreement and buy a joint reinsurance program on the commercial market.
Did you know? Claims above $10 million in any of the 12 International Group clubs are shared by all of them, so a large pollution or wreck removal bill falls on almost the whole world fleet, through the clubs’ pool and reinsurance.
How do war risks change P&I cover?
War is excluded from ordinary P&I cover as well. Owners usually buy war P&I as part of their war risk policy, up to the ship’s hull value, and the International Group clubs add an excess war P&I layer on top for mutual members. In March 2026 Howden Re put that excess layer at $500 million above the underlying war hull cover.
War cover can also be withdrawn at short notice. Within 72 hours of the start of that conflict in late February 2026, major clubs, among them Gard, Skuld, NorthStandard, the London P&I Club and Steamship Mutual, issued notices of cancellation for their non-mutual war entries, such as fixed-premium P&I and charterers’ cover, according to Howden Re. Such notices let insurers re-price the risk; owners who want to keep trading in the area must accept new terms.
Ships outside the International Group raise a different problem. A tanker insured by a small or unknown insurer may not be able to pay a large pollution claim at all, a risk discussed in our article on the so-called shadow fleet.
Who pays the war risk premium in the end?
Illustration: Portolan
The owner pays the underwriter, but the bill usually moves down the chain. Under many charter parties, the charterer reimburses the additional premium for voyages to areas it chooses. Container lines add war risk or emergency surcharges per box. Cargo owners pay twice: through those freight surcharges and through their own cargo insurance, where war cover is a separate clause with its own rate for the area.
For an importer, three questions follow. Does the cargo policy include war and strikes cover, and for which areas? Will the forwarder add a war risk surcharge, and is it per container or per shipment? And under the agreed Incoterms rule, who buys the insurance at all? What a cargo policy covers, and where war cover sits within it, is explained in our guide to marine cargo insurance. The wider effect of the Gulf disruption on trade is the subject of our article on the Strait of Hormuz.
Will war risk premiums come back down?
The market has shown that it can move both ways quickly: Gulf rates fell to about 2% after a memorandum between the United States and Iran in June 2026 and rose again within weeks. Insurers also have a balance to protect. Howden Re estimated war, terror and political violence claims for 2026 at $2 billion to $3 billion, against $1.5 billion to $2 billion of annual global premium for that segment, as Insurance Business reported in October. Governments have stepped in as well: a $40 billion US maritime reinsurance facility had written no business by May 2026, according to the same report.
Whether Gulf war cover returns toward its old level of a quarter of a percent, or settles at a permanently higher price that every cargo through the region carries, depends on events no underwriter controls. Until that is clear, the premium is a cost that shippers and their buyers should ask about on every quote that touches the area.
