Marine Insurance in a Volatile Gulf: What Businesses Need to Know

Ongoing geopolitical instability across the Strait of Hormuz, Red Sea and wider Indian Ocean is creating an increasingly complex environment for global shipping – with significant implications for businesses relying on marine insurance.

For vessel owners, cargo interests and businesses with international supply chains, the issue extends beyond operational disruption. Changing security conditions are now directly influencing shipping routes, insurance availability, premiums, policy conditions and potential claims.

A rapidly changing maritime risk environment

Transit through the Strait of Hormuz remains disrupted, with vessels delaying journeys, diverting routes or waiting for safer passage.

At the same time, attacks involving tankers, drones and other threats continue to highlight the exposure vessels face to war, terrorism and political violence risks.

For businesses and their insurance brokers, the speed at which circumstances can change is particularly important. A voyage considered acceptable when insurance is arranged may develop a very different risk profile once underway.

Changes to routing, waiting times, deviations, salvage requirements, crew safety and cargo deterioration can all potentially interact with insurance cover depending on the wording of the policy.

The Red Sea remains a major concern

Instability around the Red Sea and Bab el-Mandeb continues to form part of the wider maritime risk picture.

Missile, drone and unmanned surface craft attacks can quickly have consequences beyond the vessels directly involved, potentially increasing freight costs, extending delivery times and forcing operators to consider alternative routes.

For businesses further down the supply chain, these disruptions can translate into delayed goods, increased costs and greater concentrations of cargo in particular locations.

Supply chain disruption doesn't always mean an insured loss

Container shipping is particularly vulnerable because global networks depend on vessels and containers being in the right locations at the right time.

When vessels are diverted, services suspended or containers stranded, disruption can continue long after the original incident has passed.

Crucially, businesses should not assume that every financial consequence will automatically be covered by their marine insurance.

Cargo damage, delays, loss of market, additional expenses and wider supply chain interruption can all be treated differently by insurers. Understanding exactly what is included, excluded or requires an extension is therefore essential.

GPS interference creates another layer of risk

The increasing use of GPS jamming and Automatic Identification System (AIS) spoofing is also creating challenges.

As well as posing a navigational risk, unreliable electronic information can complicate sanctions screening, voyage monitoring and the evidence required following a claim.

Maintaining comprehensive records is therefore increasingly important. Routing instructions, vessel logs, crew reports, security warnings and correspondence can all help establish an accurate picture of events where electronic tracking information cannot be relied upon.

Piracy and other threats remain

The wider Indian Ocean also faces additional uncertainty from the potential presence of mines, questions around terminal availability and renewed piracy activity.

The source report highlights concerns that naval assets previously helping to suppress Somali piracy have been redeployed towards the Arabian Sea and Strait of Hormuz, potentially creating an opportunity for piracy to increase again.

These changing conditions can influence whether ports are considered safe, whether voyages should continue and whether businesses need additional security measures or war-risk insurance arrangements.

What should businesses do?

In such a fast-moving environment, marine insurance shouldn't simply be viewed as something arranged at the beginning of a voyage and forgotten about.

Businesses with marine exposures should review their cover regularly, maintain clear records and communicate with their insurance broker as circumstances change.

Early engagement can help identify potential gaps in cover, understand changing policy requirements and reduce the likelihood of disputes if a claim occurs.

At Vista North West, we help businesses understand complex and evolving risks and ensure their insurance arrangements continue to reflect their operations and exposures.

If your business relies on international shipping or has marine and cargo exposures, speak to our team to review your current insurance arrangements and understand how changing geopolitical risks could affect your cover.