War Coverage Cancelled in Insurance Policies
Geopolitical developments in the Middle East and rising security risks have begun reshaping insurance practices across many maritime routes, particularly the Strait of Hormuz, one of the most critical gateways for global sea trade.
Due to increasing risks, the insurance and reinsurance market is taking swift decisions, especially regarding war and strike coverage. Yalın Kılıç, Board Member of Polaris Insurance and Reinsurance Brokerage Services, explained that significant changes have been made following notifications from reinsurers in response to the ongoing Israel–U.S.–Iran conflict.
War and Strike Coverage Cancelled
Kılıç evaluated the developments in the Turkish market as follows:
“After the outbreak of the Israel–U.S.–Iran war, Turkish insurers, based on notifications from their cargo insurance reinsurers, announced the automatic cancellation of war and strike coverage under Institute War Clauses and Institute Strike Clauses for waters within the war zone. This includes the Suez Canal, Strait of Hormuz, Israeli and surrounding waters, the Red Sea, Gulf of Aden, Arabian Sea, Gulf of Oman, and the Persian Gulf.”
He noted that existing policyholders have been granted a temporary grace period, while new shipments are being approached with greater caution. Some insurers have announced changes to their risk acceptance criteria, while others continue to provide limited coverage excluding war and strike risks. A few insurers, thanks to their reinsurance facilities, are able to maintain uninterrupted coverage, particularly in the Red Sea.
Global Market Contraction
Kılıç emphasized that similar outcomes are being observed in the global insurance market:
“Developments in the region are directly affecting world trade and shipping operations. In parallel, we see insurers withdrawing or narrowing coverage, especially in cargo insurance, with war and strike clauses being the first to be restricted.”
War Excluded from Liability Policies
Kılıç also pointed out that war risks are excluded from most liability policies, stressing the importance of regular communication between companies and insurers:
“In carrier liability policies, war and wartime conditions are generally excluded. Therefore, we ask our clients to keep us informed about all actions they are compelled to take beyond their control.”
Close Monitoring with Insurers
Highlighting that Polaris Insurance is closely monitoring developments, Kılıç underlined the importance of careful analysis of shipments bound for or passing through risk zones:
“It is crucial to properly assess shipments reaching or approaching risk areas from the insurer’s perspective. At Polaris, we are working closely with insurers to ensure risks are correctly identified and that revised coverage terms do not cause undue hardship for our clients.”
Kılıç concluded:
“We hope both our clients and the industry will overcome this period with minimal damage. We will continue to closely follow developments and provide necessary updates.”
