Despite the Iran war, German ships in the Gulf region can still be insured. This was announced by the General Association of the German Insurance Industry (GDV).
“Insurers are adjusting conditions and prices, but are not withdrawing,” said GDV Managing Director Jörg Asmussen. Insurers also continue to offer so-called war risk insurance, which usually covers damage caused by mines.
According to the Association of German Shipowners (VDR), shipping companies generally take out war risk insurance for trips through risk areas and stays in them. The VDR also represents shipping companies whose ships are stuck in the Persian Gulf; traffic in the Strait of Hormuz is largely at a standstill. According to the association, at least 50 ships belonging to German shipping companies are stuck in the Gulf.
Insurers used termination rights
At the beginning of March, shortly after the start of the Iran war at the end of February, the GDV announced that ship insurers were making use of their rights to terminate war risk insurance. According to the VDR, insurers then offered the coverage at significantly higher prices.
This is “a common procedure when the risk situation changes at short notice,” said the VDR. The result is high additional costs for shipping companies. In the case of large merchant ships, six to seven-figure sums would have to be paid to insure the ships against war damage.
Insurance brokers: Prices have multiplied
Raik Becker, who works at the insurance broker Marsh Risk and negotiates with insurers for shipping companies, told the German Press Agency on Wednesday: Prices for war risk insurance have multiplied since the outbreak of war. Experience has shown that they are on average five to six times higher than before.
Shipping companies would have to pay around three to seven percent of the ship’s value for an insured trip through a high-risk area such as the Gulf, Becker further reported. There is also war risk insurance for ships stranded in the Gulf. In such a case, a period of time is agreed upon for which the insurance applies.
The Strait of Hormuz is a strait south of Iran and one of the most important oil and gas trade routes. Iran is threatening free navigation in the sea lane and has largely brought traffic to a standstill. The US set up a naval blockade on Monday.