London-based reinsurers of ships are canceling their coverage of war risk and demanding 200% more to reinstate policies, according to people familiar with the matter, after a U.S. submarine sank an Iranian warship off Sri Lanka, amplifying risk perceptions.
Rates for shipping lines to buyback this cover that usually climb as much as 50% in wartime have instead tripled in some cases — rising to $750,000 per vessel from $250,000, the people said, asking not to be identified because the information is private.
Most policy cancellations have been initiated since March 5, they said, adding that premiums vary depending on vessel flag, ownership, and ports of call. Bloomberg News has seen a cancellation notice dated as recently as March 4 — the day a U.S. submarine sank the Iranian warship.
The U.S. submarine attack in international waters — the first time since World War II that an American sub has attacked a surface vessel — has further triggered a surge in risk premiums for hull and related marine coverage. The Indian Ocean strike, far outside the Middle East war zone, underscored fears that the conflict’s impact is widening geographically, the people said.
