iran But amid the rapidly deteriorating environment in West Asia after the attacks by Israel and America, experts have expressed the fear of an increase in the insurance premium related to war risk for cargo ships. Experts said on Tuesday that ships passing through high-risk areas will now have to pay higher premiums. Balasundaram R., Head (Marine Insurance), Policybazaar. “The cost of obtaining war risk coverage may increase when Shipping Corporation of India (SCI) vessels involved in the transportation of crude oil and LNG transit through sensitive maritime areas such as the Red Sea,” it said.
Notice to cancel war coverage on board has recently been issued.
Insurance sector experts say that for war risks and strikes, riots and civil unrest covers, insurance companies can usually cancel coverage with 3 to 7 days’ notice. Gaurav Aggarwal, head of marine expertise at Prudent Insurance Brokers, said that recently a notice has been issued to cancel war coverage on ships and a similar step may be taken soon on cargo insurance also. Experts say that even if a new war risk cover becomes available after the insurance coverage is cancelled, its price could be very high.
Transportation costs will increase, global trade will be adversely affected.
Hari Radhakrishnan of the Insurance Brokers Association of India (IBAI) said premium rates have increased from 0.25-0.5 per cent to almost 1.00 per cent in some cases. This will lead to a huge increase in transportation costs and will have a negative impact on global trade. Insurance consultants believe that if the conflict prolongs, both shipping costs, transportation expenses and risk premiums will increase. Apart from this, many ships that have already departed are standing in international waters waiting for the situation to become normal.
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