Global Insurance Marketplace Insights Q3 2026 – Marine

CHRISTOPHER MARO: Today, we're talking about the Straits of Hormuz and the impact of the Iran conflict on war risk coverage, premium volatility, global trade, vessel security, and crew welfare. I'm Chris Maro, Managing Director of Marine North America at Willis Marine

And today, I have the pleasure to be joined by Charlie McCammon, Senior Director of Marine North America, and James Reason, Head of Hull Marine GB. Gentlemen, let's get into it. First, can you describe the current risk landscape at sea and how it compares to say 5 or 10 years ago?

CHARLIE MCCAMMON: 5 to 10 years ago, maritime security conversations were dominated by asymmetric piracy, generally around the Horn of Africa or in the Far East. Today, landscape is defined by geopolitical risks, state versus state kinetic aggression, weaponized drone technology, naval mines, and multi-chokepoint volatility are the new threats.

We've really moved from anti-piracy operations on vessels to now vessels at sea are facing anti-ship ballistic missiles, loitering munitions, and electronic warfare, including GPS spoofing. So the other issue now is, instead of just a threat in one area, we have threats in multi-corridors, including the Red Sea, the Persian Gulf, and the Black Sea. So it's a completely new atmosphere for ship owners.

CHRISTOPHER MARO: Yeah. So I'd also say, Charlie, that it's becoming more of an operational and commercial issue. Wouldn't you agree, James?

JAMES REASON: Yeah, absolutely Chris. I mean, I think the big concern implications here for clients and more importantly seafarers is that there is now heightened risk across multiple regions. So whilst we are all feeling the impact on global trade, we also have to understand and realize that there's a human element to this as well, which has a long lasting effect on those involved.

CHRISTOPHER MARO: Yeah and just sticking with you, James, in our careers, have you ever seen a period where so many major shipping lanes were simultaneously under threat?

JAMES REASON: In short, no. I think the market and the shipping community is very aware that currently at the moment, we have a number of theaters or regions which are at very acute or severe threat levels, active conflicts being engaged throughout.

Throughout my career, it's been consistent that at least one region, whether it be Middle East or East and West Africa, sometimes parts of Asia, have been hotspots, and that has attracted increased premium and exposure to ship owners.

We absolutely now have a number of very large regions which are key shipping, transit points, choke points, and waterways which are under significant threat from open conflict. So yeah, I think the level of activity and military activity on these regions is, I want to use the word unprecedented, but it is certainly something that many haven't seen in their careers.

CHARLIE MCCAMMON: Yeah, and I would say we haven't had anything to this large of a degree since World War II. And for underwriters, this really is a fundamental change when it comes to how they have to price the risk.

There's a loss of diversification that happens. Historically, underwriters offset one region where there was crisis with many regions that were peaceful and didn't have as many risks. And then the underwriters are having to change their modeling.

They can't rely on historical actuary data. They're having to be more dynamic with their pricing and they really have to look more granular exactly where vessels are, where they might be heading, and what the actual risks might be before setting their pricing.

JAMES REASON: Yeah, Charlie, I think you make a really good point, actually, with everything now, the advancement of technology for good and for bad, we've seen it, obviously, in the Russia-Ukraine conflict used on land and at sea. But the rise in drone technology, autonomous unmanned vehicles, et cetera, that has allowed the bad actors to strike at maritime assets at will with accuracy. And we are seeing a significant uptick in the frequency of attacks and events on shipping assets.

CHRISTOPHER MARO: Yeah, I think there's an important difference between insurance being available and insurance being commercially viable. And just wondering, could escalation reach a point where insurers can offer cover at a commercially viable price? As we clearly have been probed by a number of our clients about this aspect of the business.

CHARLIE MCCAMMON: I'd say that we could have a systemic failure of the market if the reinsurance capacity were to retreat entirely. However, based on the finances of the reinsurance markets currently, I don't think that would happen, unless there was an extreme escalation between more of the major powers in the world.

JAMES REASON: Yeah, I would agree with that, Charlie. I think whilst these losses are coming in very thick and fast at the moment to the Marine war market, they are still not what we would consider a catastrophe event for the class.

I genuinely think if we had all of the tonnage that was, shall we say, trapped or blocked in the Straits of Hormuz originally from the 28th of February, if there had been a market claim for all of that tonnage, then I think that starts to move the dial and then becomes a reinsurance event.

At the moment, this is a direct market event and they are dealing with it by the rate increase mechanism by charging APs for vessels that are calling into those breach areas. The market continues to function. There is cover, what we have seen throughout both the conflict within the Arabian Gulf and the Strait of Hormuz, as well as the Black Sea and Red Sea as well.

When we have upticks in activity and there's multiple vessels struck in a 24- or 48-hour period, understandably, insurers then pause on quoting further vessels going in the next 24 hours because they deem the risk to be too high and the environment just too volatile.

We normally see then a period of inactivity, and then some of the vessels are then fixed to go through, and then we then see some uptick in traffic. But the market still functions, still provides capacity. There is still elements of competition, albeit it's still quite cautious at times, but it is functioning.

CHRISTOPHER MARO: It sounds as if, I mean, we lived in a world where war risk was, dare I say, niche and a bit specialized in its nature. Has it become a mainstream commercial necessity, James? It sounds like that's where you were leading to and what we've been seeing.

JAMES REASON: Yeah, absolutely. I think any operator now that is trading vessels in and out of these, what we consider these conflict areas will not be operating without insurance. There is a small handful of operators that may have tonnage without finance attached to it.

We've seen potentially some low-valued vessels in the initial start of the Ukraine conflict, whereby vessels were going in there, sometimes running uninsured because the premiums involved were deemed to be too high.

But I think now, given the exposure and the risk, there is very few, if any, that are actually taking that risk and it is now an essential part of your marine insurance spend. And I don't think there's any prudent owner or ship owner that wouldn't be engaging and buying full cover for this class of business.

CHARLIE MCCAMMON: Yeah, I would agree with that. I mean, really, to be an operational company, you're going to have to purchase the war risk insurance and there's a lot of requirements in the contracts involved that are requiring it.

So most of the counterparties to any of these transactions, when it comes to global shipping, are going to require the war risk insurance and unfortunately, the owners are going to have to pay those premiums in order to continue conducting business.

CHRISTOPHER MARO: Yeah and we clearly have our finger on the pulse of what's going on in the market. The larger question always that comes out is, how are war risk premiums being calculated for Hormuz directly? And James, curious, obviously, with you leading the team and what you're seeing on the ground, what your thoughts are on that.

JAMES REASON: Yeah, I mean, the market, whilst it is a marketplace and everyone rates and operates independently, it's also a subscription marketplace. So quite often, when placing individual risks or contracts for larger portfolios, you have to involve multiple insurers. So everyone has to agree to a set of common rates.

There is an understanding whereby typically rates on any particular day, you will obviously get a divergence and certain underwriters, quite rightly and understandably, will give preferential rates to their larger clients with higher volumes, et cetera.

But for Strait of Hormuz specifically, these rates now are so elevated in comparison to what we've seen in the past. You could argue the risk is, obviously, reflective of that. And I think at times, when we get a real spike in these rates and we're talking about double digit rates for transits, certainly double digit gross rates, we talked about, when it become cost prohibitive.

Whilst there are terms being quoted and there's cover available, sometimes you can see the ship owners pausing and waiting until maybe the market improves over the next couple of days before actually going ahead with these calls.

Because at that time, when you're paying in the single digit millions for a single vessel transit, you have to be getting a very, very good charter rate. And that is available, obviously, out there but it's a difficult place to operate and fix it.

CHARLIE MCCAMMON: Yeah, and I would say the global reinsurance capacity also influences the pricing, because the reinsurance capacity covers all of the regions with the same capital pool. And if you have repeated losses in one theater, that could reduce global capacity, driving up baseline pricing everywhere else.

Sometimes clients are surprised that their pricing has gone up if they're operating in one theater that's not having as many losses. But the overall reinsurance market dictates those increases.

CHRISTOPHER MARO: Yeah, and James made a good point earlier, it's a marketplace and it's a sophisticated marketplace and I think underwriters are trying to price, not just what happened yesterday, but what could happen tomorrow.

And just on that point, I believe we just saw in the press about another tanker incident near Oman, an attack, what drives sudden spikes in war risk premiums, James? And would you say that it's that similar scenario today that we've seen or is it more of an evaluated approach?

JAMES REASON: Yeah so, I think in short, when we're talking about the three regions which we have specifically referenced on this call, so we're talking Strait of Hormuz, we're talking Red Sea, Black Sea, there is a direct correlation between events in the preceding-- we're talking now 24 hours, 48 hours because it's so active and so fast moving.

So obviously, when there is a number of attacks in any one particular port or region, underwriters are aware that there's an increase in the intent to strike maritime assets in port or in that waterway. So, as a result, any future ones that are looking to go in a very short space of time are having to pay an inflated premium.

As I said, where there's a little bit of a lull in activity, whether that's because there's negotiations going on at government level or there's just a general pause, we do then see rates just generally tend to drift down a little bit, a little more competition comes into it. But then, unfortunately, as soon as there's another incident, the rates are quite reactive.

CHARLIE MCCAMMON: Yeah, I'd say this is a direct correlation to the joint work committee listed areas with these additional premiums. They are driven by the key inputs which are again perceived intention of capability of the threat actors.

So they are looking directly at the immediate threats and looking for a period of time. Sometimes you just may want to wait a few days to see if these spikes might come back down. So this makes it very hard for the brokers, but they have to be they're in the markets every day and they can understand what the trends are.

CHRISTOPHER MARO: Yeah, and I think to that point, Charlie, we're getting a lot of inquiries about how quickly can war risk coverage be withdrawn? And if you have an incident that escalates overnight in the Straits, what protections or gaps does a ship owner particularly face in the hours between an event and the insurers response?

JAMES REASON: Yeah, happy to take that, Chris. I think what I think we've got to be very clear on here is that at the outset of the original Iran conflict, and it's been also, I think, present in previous conflicts, is that when insurers gave a notice of cancelation, they're effectively giving notice. It's typically a seven-day notice under the institute clauses or sometimes it's shorter on different clauses within the contract.

But they give notice to reinstate cover at a revised areas of enhanced risk. So cover is always maintained and if you're in the area, you have cover. But obviously, after a significant event or a conflict starting, then insurers have the right under the contract to give notice and revise their rating and AP mechanism.

But the important point is that shipowners aren't without cover. The market's not withdrawing cover. It's taking the contractual ability to list and reinstate cover at different terms.

CHRISTOPHER MARO: Or any one of our vessel owners or operators or cargo owner clients listening today to this, what would you both say is the single most important thing that they should be doing or asking their broker that they may be neglecting?

CHARLIE MCCAMMON: I'll take that one. So I think that it's important to audit your policies, sanction clauses, the notice of cancelation timelines, and make sure that any charter parties you have are aligned with these provisions.

Often, operators discover too late that their charter party terms do not mirror the insurance policy conditions. So that could be problematic. And your brokers are here to help you review the interplay between your insurance terms and your commercial charter agreements. So we always recommend that the owners and operators work with their brokers to understand the war clauses because it is a very complex and not everyday occurrence.

JAMES REASON: Yeah, and I think just to echo those comments, I think whether you have shipowner, you operators that are actively trading to any of these volatile areas, you need your broker to be in the market, have his finger on the pulse regarding rating, terms, conditions, availability of capacity and coverage.

But also, as we've touched on, the ability to be able to provide accurate, timely information on these areas and give real insight as into the viability of being able to go forward with a particular operation, port call transit, I think is really critical.

So many of our clients now are very advanced and developed in this area as well. So they have their own information. But I think that's a real additional part of the service now that any broker of any merit should be looking at.

CHRISTOPHER MARO: Traditional role of the broker is long gone, and clients should be expecting us to do more than just give them a price. Tell me what you're seeing, tell me what the market is doing and dictating, tell me what other options I should be considering and then where there may be pitfalls. That goes back to, Charlie, your comments about the contractual review.

Gentlemen, this was great and thank you both for sharing the insights on today's episode. No doubt it's a challenging time out there, but not one without solutions when you partner with the marine insurance experts. Until next time, thank you all for listening.

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