MUMBAI: Insurers are bracing for “notice of cancellation” clauses to be invoked on war-risk covers and for multifold increases in war-risk premiums in the wake of conflict in the Persian Gulf. Some marine war-risk insurers have already issued cancellation notices for ships transiting the Strait of Hormuz after the strikes amid fears of Strait closure, Iranian seizures and retaliatory strikes. Many ships have diverted routes, adding further to costs.
While aviation coverage remains active, airlines are playing it safe and suspending flights in the region. Insurers point out that there is often a grey area, as conditions of cover state the insured must take all precautions they would have taken if uninsured.
“In case of ships and airlines, insurers can issue a notice of cancellation of war cover for specified zones after due notice. For ships already at sea, ongoing voyages will remain covered until cancellation. Post-cancellation, they may impose geographic limits or increase premiums,” said Kunal Khanna, MD-Reinsurance and global head of natural resources, Edme Insurance Brokers. “If the conflict continues for long, it will impact reinsurance contracts, which are typically struck from the beginning of April in India,” he added.
