Wait for Cheaper Insurance Even After the War Has ceased

Insurance market experts believe that marine war-risk insurance premiums may soften if the proposed agreement between the United States and Iran leads to the permanent reopening of the Strait of Hormuz and a reduction in regional tensions.

The United States and Iran have agreed on a Memorandum of Understanding (MoU) aimed at ending the conflict that began in late February.

However, senior industry officials have cautioned that despite this positive development, insurance companies are unlikely to reduce premiums immediately. Any reduction will largely depend on the extent to which the agreement improves the movement of ships through the region.

According to insurance brokers, before the introduction of BMIP, reinsurers were charging war-risk insurance premiums ranging from 2 to 3 percent of the cargo value for shipments passing through the Persian Gulf.

During the four-month conflict, several international insurers and reinsurers either withdrew war-risk insurance coverage for vessels transiting high-risk areas or significantly increased premium rates.

According to the Insurance Brokers Association of India (IBAI), insurance companies may adopt a wait-and-watch approach over the next few weeks. This is because concerns regarding renewed tensions, operational disruptions, or possible violations of the agreement have not been completely eliminated.

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