Gulf conflict strands 20,000 seafarers - and tests marine insurance limits

Gulf conflict strands 20,000 seafarers - and tests marine insurance limits
Josh Recamara Mar 15, 2026 https://www.insurancebusinessmag.com/us/news/marine/gulf-conflict-strand...

Insurers, P&I clubs and brokers are forced to confront hard limits on insurability

Escalating attacks on merchant ships in and around the Strait of Hormuz have quickly become a major insurance event, with war risk cover being pulled, exposures repriced and thousands of seafarers on board vessels in a high‑risk zone.

International Maritime Organization (IMO) Secretary‑General Arsenio Dominguez condemned the situation after a March 6, 2026, attack in the strait left “at least four seafarers” dead and three severely injured, following earlier incidents that had already claimed lives in the region.

“Seafarers must not be targets,” he said, calling the situation “unacceptable and unsustainable” and urging all parties to safeguard “the protection of seafarers, including their rights and well‑being, and the freedom of navigation, in accordance with international law.”

Around 20,000 seafarers are estimated to be stranded on ships in the Persian Gulf, under heightened physical threat and considerable psychological strain, as owners and charterers halt or divert voyages.

War risk cancellations and pricing shock

The most immediate impact for insurers has been the response from the war risk market. Following the launch of US‑Israeli Operation Epic Fury against Iranian targets on Feb. 28, several marine insurers issued notices canceling war risk coverage for ships operating in Iran and the wider Persian/Arabian Gulf.

According to these notices, war risk cover is now excluded in Iran and Iranian coastal waters up to 12 nautical miles offshore, as well as in the Persian/Arabian Gulf and adjacent waters. Owners wishing to transit must either renegotiate specific extensions at sharply higher premiums or avoid the area entirely.

For P&I clubs and hull war markets, the combination of missile strikes, drone threats and electronic interference has dramatically altered the risk profile almost overnight. Tankers and LNG carriers that had been transiting a heavily insured but broadly manageable corridor are now potential total‑loss or mass‑casualty exposures. Insurers are reassessing accumulation across fleets at anchor and along alternative routes, particularly where high‑value energy cargoes cluster near new chokepoints.

Contract certainty and clauses under stress

The cancellations and exclusions will test the robustness of war, safe‑port and deviation clauses in charterparties and insurance wordings. If a ship loses war cover mid‑voyage or finds that a planned port sits inside an excluded zone, owners and charterers will need to agree whether a reroute constitutes a legitimate deviation and who bears the additional cost.

Brokers are already navigating disputes over whether particular anchorages or sea lanes fall inside the excluded areas and how quickly notice periods apply. Any ambiguity around “adjacent waters” or operational definitions of the Persian/Arabian Gulf increases the potential for coverage disputes after a casualty.

Claims handlers also face complex causation questions. Where GPS and AIS interference contributes to a collision or grounding, for example, insurers will need to decide whether the loss falls under war, cyber or standard hull and machinery cover, and how deductibles and sub‑limits interact.

Human‑element liabilities and crew welfare

The human impact of the crisis carries its own set of insurance implications. With around 20,000 seafarers, as well as cruise passengers, port workers and offshore crews, affected by the standstill, shipowners and their P&I clubs must consider the mental‑health, repatriation and wage‑continuation obligations that arise when crews are effectively trapped in a declared high‑risk area.

If seafarers refuse to sail into, or continue operating within, the Gulf, owners could face claims linked to unsafe work environments. Where casualties occur, liability for death and personal injury will fall under P&I cover, but any gaps created by war exclusions or sanctions restrictions could complicate recovery and settlement.

Dominguez’s emphasis on the “rights and well‑being” of seafarers will also increase regulatory and public scrutiny of whether insurers and shipowners have taken reasonable steps to mitigate risk, including timely withdrawal from the most dangerous zones once war risk cover was canceled.
Reinsurance, aggregation and systemic risk

Reinsurers are watching the Gulf closely for signs of systemic loss. A single large‑scale incident involving multiple tankers or LNG carriers could trigger significant clash losses across war, energy, cargo and liability programs. The concentration of stranded ships in a relatively confined area raises the possibility of multiple hull and liability claims arising from one missile salvo, minefield or mis‑targeted strike.

The Gulf crisis is a reminder of how quickly geopolitical tension can migrate from a pricing discussion to a question of basic insurability. As war risk cover is withdrawn and exposures become increasingly binary – either excluded or priced at prohibitive levels – owners, charterers and their insurers must decide how much risk they are willing, or able, to carry in one of the world’s most strategically important sea lanes.