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War-risk marine coverage demand dries up in Red Sea and Arabian Gulf
Marsh said vessel traffic through the region has fallen sharply, with zero ships passing on one recent day versus about 150 normal daily transits, while underwriter backing for pricing has thinned.
Marsh warned that demand for war-risk marine insurance across key Red Sea and Arabian Gulf shipping corridors has largely disappeared, citing a shift in how insurers view the risk and noting a potential further escalation risk involving Saudi-linked vessels. Marsh global head of marine, cargo and logistics, Marcus Baker, told CNBC's Power Lunch that the picture in the Arabian Gulf and Red Sea has changed in recent weeks, with more attention now focused on ships carrying Saudi ownership or flags, and that additional attacks could push tensions higher.
Baker said shipowners have largely stopped lining up coverage to make the crossing, pointing to Marsh's vessel-tracking data showing no ships passing through the region on one recent day and only a handful since, compared with a normal daily transit count of around 150. He attributed the drop to what he called a broken feedback loop, where fewer vessels testing the route leaves underwriters with less confidence to price the risk sensibly, keeping rates too high for many owners and further reducing the number of ships seeking cover.
The broker said war-risk cover remains technically available, but the market backing it has become noticeably thinner. Marsh also flagged volatility in the Strait of Hormuz over recent months, with premiums spiking when ceasefire hopes look shaky, even after a US-Iran memorandum of understanding, as Baker said insurer unease persists behind the scenes about whether the region is calm enough to justify taking on additional risk.
The article also points to a concrete example of insurers reacting to events in the region, noting that Gallagher arranged cover for one of two Saudi tankers struck by Houthi missiles and drones in the Red Sea last week, according to City AM, which cited two people familiar with the matter. Gallagher did not underwrite the policy itself, the article said.