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War-risk insurance premiums for Gulf shipping set to stabilise after US-Iran ceasefire
Underwriters are taking a cautious approach after weeks of geopolitical tensions that pushed war-risk premiums higher, especially for vessels in the Strait of Hormuz
- PUBLISHED: Sun 28 Jun 2026, 5:19 PM UPDATED: Sun 28 Jun 2026, 7:45 PM
War-risk insurance premiums for cargo shipments and travel are expected to gradually stabilise in the coming weeks as the US-Iran ceasefire eases concerns over regional security. However, insurers say any meaningful reduction in rates will depend on whether the truce holds and shipping conditions improve.
Underwriters are taking a cautious approach after weeks of heightened geopolitical tensions that drove war-risk premiums sharply higher, particularly for vessels transiting the Strait of Hormuz, insurers said. While the ceasefire has improved market sentiment, insurers are waiting for sustained evidence that the risk of renewed disruption has diminished before repricing policies.
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“Insurers are unlikely to reduce premiums right away, as the market response will depend heavily on whether shipping conditions across the region actually improve on the ground,” Neeraj Gupta, CEO of Policybazaar UAE, told Khaleej Times.
He compared the current situation to the aftermath of the Gulf war, when cargo insurance rates dropped significantly within weeks after the end of the war. However, he noted that today's market is likely to require two to four weeks of confirmed de-escalation before lower geopolitical risks begin to be reflected in pricing, while a full return to pre-conflict rates could take several months.
Wait-and-watch approach
During the first phase of the ceasefire, insurers and shipping markets adopted a wait-and-watch approach rather than immediately lowering war-risk premiums, as underwriters sought evidence that the improvement in regional security would be sustained.
While the interim ceasefire provided short relief, the past two days has seen the hostilities return at a greater pace since Iran and the US signed a Memorandum of Understanding earlier this month.
In the Strait of Hormuz, Iranian drones targeted a cargo ship, in which the US responded by attacking Iran. Iranian naval forces responded by striking US military targets in the region, wherein Bahrain said it was targeted on Saturday.
Gradual repricing expected
Rishi Thapar, head of War, Terrorism and Political Violence at Lockton, also expects the market to normalise gradually rather than rapidly.
"The political violence insurance market is beginning to stabilise as geopolitical tensions ease, but it's not a reset," Thapar said. "We're seeing some early signs of pricing improvement, but recent losses and ongoing uncertainty mean the market will adjust gradually rather than sharply."
Even if the situation remains calm for the foreseeable future, it is not expected of insurers to fully reprice risk immediately, according to Aurélien Paradis, CEO of AU Group MEA.
“The recent increase in war-risk premiums shows why the market will remain cautious,” he said. “In some cases, Gulf shipping premiums reportedly rose by more than 1,000 per cent, while tanker hull war-risk rates moved from around 0.25 per cent to as much as 3 per cent of vessel value. When risk has been repriced that sharply, it does not unwind overnight.”
Hind Aldah is a business reporter based in Sharjah. In her spare time, you will find her playing classical guitar, painting amateur oil paintings, or crocheting the same old scarf that leads nowhere.