Shipping companies operating in regions affected by military conflicts are encountering heightened demands for war-risk insurance coverage and significant legal hurdles. Neil Roberts, head of marine and aviation at the Lloyd’s Market Association (LMA), indicated that the proliferation of global conflicts and the imposition of international sanctions are exacerbating these issues, potentially delaying critical casualty response efforts.
This situation means that vessels transiting through or operating in areas designated as high-risk by bodies like the Joint War Committee (JWC) of the LMA face additional costs. The JWC is responsible for identifying and listing areas where the risk of war, piracy, and terrorism is elevated, leading insurers to apply additional premiums for coverage in these zones.
For freight forwarders and shippers, this translates directly into higher operational expenses. Increased war-risk premiums will likely be passed on through surcharges, affecting overall freight rates. Furthermore, the potential for delayed casualty response due to sanctions could lead to longer transit times, cargo damage, and increased demurrage costs. Forwarders must carefully assess routing options and ensure their clients are aware of these escalating risks and associated costs, particularly for shipments through volatile regions.