Mon, 2 March 2026

The global maritime industry entered a period of unprecedented instability on February 28, 2026, as the escalating US-Iran conflict transformed key shipping corridors into high-risk operational zones. The repercussions extend far beyond geopolitical headlines—they have fundamentally reshaped the risk landscape for commercial shipping, triggering coordinated insurance withdrawals and forcing shipowners to recalibrate their operational strategies.

The conflict has generated a cascade of tangible threats: missile and drone attacks on vessels, damage to commercial tankers, GPS interference affecting over 1,000 ships, and severe disruptions to navigation through the Strait of Hormuz. Vessel traffic has plummeted as ships reroute, delay voyages, or anchor outside designated danger zones. Simultaneously, leading marine insurers and Protection & Indemnity (P&I) clubs—including Gard, Skuld, and the American Club—have issued coordinated cancellation notices for certain war risk covers, fundamentally altering the allocation of risk between insurers and ship operators.

This article examines the nature of maritime war risks, the scope and implications of the 2026 insurance withdrawals, and the strategic considerations shipowners must address in this volatile environment.

The Nature of Maritime War Risks

Maritime war risks encompass a broad spectrum of perils arising from hostile, political, or conflict-related activities. Unlike conventional marine risks covered under standard Hull & Machinery (H&M) policies, war risks are characterized by their high-impact potential, volatility, and the challenges they pose for traditional underwriting models.

Traditional War Risk Perils

War risk insurance has historically covered:

  • Armed conflict and warlike operations – Whether declared or undeclared, including state-on-state hostilities
  • Terrorism and politically motivated violence – Attacks by non-state actors targeting vessels, ports, or cargo
  • Missile, drone, and naval mine attacks – Increasingly prevalent in asymmetric warfare environments
  • Piracy and violent robbery – Particularly in regions with weak maritime governance (policy-dependent)
  • Capture, seizure, arrest, or detention – By governments, militias, or armed groups
  • Civil unrest, riots, and insurrection – Affecting port operations and coastal transit zones

Emerging Hybrid Threats

The 2026 conflict environment has introduced new dimensions of risk that compound traditional war perils:

  • Electronic warfare – GPS spoofing and jamming disrupting navigation systems
  • Targeted attacks based on vessel characteristics – Flag state, ownership structure, or perceived political affiliation
  • Coordinated multi-domain operations – Simultaneous air, sea, and cyber attacks

These evolving threats require specialized insurance arrangements, typically structured as extensions or endorsements separate from standard marine policies.

Scope of the 2026 Insurance Cancellations

The recent circulars from major P&I clubs represent a targeted withdrawal rather than a complete cessation of coverage. Understanding which protections remain and which have been cancelled is critical for shipowners navigating the current crisis.

Cancelled Covers

The following categories have been most significantly impacted:

  • Charterers' Liability Insurance
  • Fixed Premium P&I Policies
  • Non-poolable extensions to mutual P&I cover
  • Ancillary war risk extensions attached to non-mutual entries

These covers depend heavily on reinsurance capacity, which has been withdrawn as reinsurers reassess exposure to rapidly deteriorating conflict zones.

Continuing Covers

Importantly, not all protections have been removed:

  • Mutual P&I coverage through the International Group Pool remains largely intact
  • Freight, Demurrage & Defence (FD&D) cover continues unaffected

This distinction is crucial: while core liability protections persist, supplementary war-related protections have been withdrawn, creating potentially significant coverage gaps.

 

Geographic Focus: The World's Most Strategic Waters

The cancellations apply specifically to operations in the **Persian/Arabian Gulf** and **Gulf of Oman**—among the most strategically vital maritime regions globally.

These waters support:

  • Major crude oil and liquefied natural gas (LNG) exports
  • High-volume bulk carrier and container vessel traffic
  • The **Strait of Hormuz**, through which approximately one-fifth of global petroleum liquids transit

With escalating military activity and heightened targeting of commercial shipping, these locations have exceeded acceptable risk thresholds for many insurers, forcing a rapid recalibration of coverage terms.

Timing and Mechanism: The 72-Hour Window

The cancellation structure reflects the urgent and unpredictable nature of conflict-driven risk:

  • Notice Period: Typically, 72 hours from issuance
  • Effective Termination: Shortly after notice expiry
  • Post-Termination Condition: No recovery for war-related claims occurring in designated areas after the cutoff date

This compressed timeline leaves shipowners with minimal time to secure alternative coverage or adjust operational plans, underscoring the need for pre-established contingency protocols.

Operational and Commercial Implications

The withdrawal of war risk coverage generates immediate and cascading consequences across multiple dimensions of shipping operations.

Heightened Exposure

Shipowners and charterers now face:

  • Uninsured war-related liabilities: in high-risk zones
  • Risk of total loss without indemnity
  • Increased exposure to third-party claims and environmental liabilities

Contractual Complexity

  • Charterparties may require renegotiation, suspension, or termination
  • Safe port warranties become central considerations
  • War risk clauses such as **CONWARTIME** and **VOYWAR** gain operational significance

Insurance Market Dynamics

  • War risk premiums are rising sharply where coverage remains available
  • Capacity is restricted and often conditional
  • Insurers are imposing strict navigational limits and additional warranties

Strategic Response: A Framework for Shipowners

In this transformed risk environment, war risk management is no longer peripheral—it is a core operational imperative. Shipowners must adopt a comprehensive, proactive strategy.

Insurance Review

  • Identify all affected and cancelled covers
  • Map coverage gaps in war risk exposure
  • Secure alternative or supplementary war risk insurance where available
  • Review policy exclusions, limits, and geographical restrictions

Voyage Risk Assessment

  • Assess the commercial necessity of entering high-risk zones
  • Conduct real-time threat and intelligence analysis
  • Evaluate rerouting or delay options
  • Monitor advisories from naval forces and maritime security agencies

Contractual Safeguards

  • Review charterparty war risk clauses (CONWARTIME / VOYWAR)
  • Ensure contractual rights to refuse unsafe voyages or ports
  • Align insurance coverage with contractual obligations

Operational Preparedness

  • Enhance Ship Security Plans (SSP)
  • Train crew for conflict-zone emergency response
  • Establish communication protocols with military or naval escorts if available
  • Prepare for rapid deviation or contingency routing

Financial and Risk Planning

  • Quantify potential uninsured exposure scenarios
  • Allocate budget for increased premiums and operational costs
  • Adjust freight pricing and commercial strategy accordingly

Continuous Monitoring

  • Track updates from P&I clubs and insurers
  • Monitor regional conflict developments and sanctions regimes
  • Stay informed on emerging threats, including cyber and electronic warfare

Summary: Key Elements of the 2026 War Risk Environment

Category

Details

Trigger Event

USA - Iran conflict escalation (February 2026)

Affected Regions

Persian/Arabian Gulf, Gulf of Oman, Strait of Hormuz

Key Threats

Missiles, drones, mines, seizures, GPS interference, targeted attacks

Cancelled Covers

Charterers' liability, fixed P&I, non-poolable extensions

Continuing Covers

Mutual P&I (pooled), FD&D

Notice Period

Approximately 72 hours

Market Impact

Reduced capacity, higher premiums, stricter underwriting

Operational Impact

Rerouting, delays, reduced traffic, increased uninsured exposure

 

Conclusion

The US-Iran conflict represents a watershed moment in maritime risk management. The convergence of escalating geopolitical conflict and the coordinated withdrawal of key war risk insurance protections has fundamentally altered the operating environment in some of the world's most critical shipping lanes.

While core mutual P&I protections remain in place, the loss of extended war risk coverage exposes shipowners to significant financial and operational vulnerabilities. Transiting the Persian Gulf and surrounding waters is no longer purely a matter of navigation or logistics—it is a strategic decision demanding careful evaluation of risk tolerance, insurance availability, contractual obligations, and geopolitical intelligence.

In this new reality, effective shipping operations depend on proactive planning, informed risk assessment, and adaptive decision-making in the face of rapidly evolving threats. Shipowners who integrate comprehensive war risk management into their operational frameworks will be best positioned to navigate this period of heightened uncertainty while protecting their assets, crews, and commercial interests.

The maritime industry has weathered periods of instability before, but the 2026 conflict environment—characterized by hybrid warfare, insurance market contraction, and unprecedented technological threats—demands a fundamentally different approach to risk. Success will require not only operational excellence but also strategic foresight and the capacity to adapt quickly as conditions continue to evolve.