MediumVII Reinsurance & Specialty Risk9 November 2026, Monday
Gulf war premiums fall as low as 5% while losses mount
Insurance Business reported on 9 November that the additional war premium for Gulf tankers has eased to 7–9% of hull value, with some policies written at 5%. Over the same period the region's claims tally passed 110, with estimated payouts of about $2.5 billion.
According to the report, competition rather than risk is driving prices down: insurers are cutting rates to win Gulf business. In mid-October brokers were quoting 6–10% for Gulf tankers; Marsh puts the pre-war rate at about 0.25%. In the Black Sea, by contrast, hull war premiums have reached 20%, roughly four times the Gulf tanker rate.
The loss side does not support the price. Citing Lloyd's List data, the report counts more than 110 claims in the Gulf and estimated payouts of about $2.5 billion. UKMTO has recorded attacks on more than 20 ships in Hormuz, the Persian Gulf and the Gulf of Oman since 1 October. Marsh Re says war, terrorism and political violence losses in the region exceed $2 billion, against annual gross premiums of about $2.5 billion.
Intelligent Insurer reported on 2 September that, according to Marsh, the war and political violence reinsurance market had entered its first loss-making year since 9/11 just as new capacity was arriving. Talay's reading is that premiums are falling because of surplus new capital, not because of the loss ratio. That raises the risk of reinsurers hardening prices again at the 1 January renewal.
Talay assessment
Bottom line
Gulf war premiums are falling while attacks continue, carried not by improved security but by new capacity chasing market share. With losses nearing $2.5 billion and premium income at the same level, the class's loss-making year drags on. The most likely path is that premiums stay low in the near term, followed by hardening on the reinsurance side at the 1 January renewal.
Likely effects
- Tanker transit costsPositiveWeeks
A premium in the 5–9% range lowers the delivered cost of Gulf cargoes and makes transits more bearable for owners.
- Reinsurance pricingNegative1–6 months
Falling prices while the loss ratio runs level with premiums create pressure for higher war and political violence retrocession rates at 1 January.
- TürkiyeUncertainWeeks
Lower war premiums on Gulf and Iraqi cargoes ease delivered costs for Turkish refiners; the 20% Black Sea rate remains a separate burden.
Possibilities, ranked
- 1Low premiums, hard renewal55%
Primary premiums stay low through November and December, and reinsurers renew war retro at higher prices on 1 January.
Watch: Broker 1 January renewal reports and Gulf war premium quotes
- 2A new strike pushes premiums back up30%
A major tanker loss lifts the premium back above 10%.
Watch: UKMTO incident reports and total loss declarations
- 3Genuine softening15%
Attacks fall to zero for two consecutive weeks and the premium settles below 3%.
Watch: JMIC weekly count of new incidents
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Gulf war premium▲ 5–9%
- Gulf claims▼ >110
- Estimated payouts▼ ~$2.5bn