Risk management company Russell Group has warned that cargo insurance companies can expect to experience a high exposure value following recent attacks on two oil tankers in the Gulf of Oman.
The explosions that hit Japanese product tanker, Kokuka Courageous and the Norwegian tanker, Front Altair on Thursday occurred just weeks after the coordinated May 12th attacks on four tankers close to a port in the United Arab Emirates.
Following the most recent attacks, which contribute to rising political instability and growing political tensions in the region and beyond, insurance industry commentary has suggested that it’s likely that insurers will push for higher premiums.
Russell Group has said that its analysis reveals that cargo insurers can expect to face an exposure value of $40 million for goods on the Kokuka Courageous and $25 million for the Front Altair tanker, which is a total of $65 million.
The firm states that there are more than 67,533 movements by goods carrying vessels through the strait of Hormuz each year, adding that of this, 25%, or 16,877 are from vessels that are operated by an Asian domiciled operator, with the top five countries accounting for 81% of this 16,877.
Since the attacks, numerous reports have claimed that insurance premiums in the region are likely to rise, something that has happened in the past following instability in the Gulf region.
Bloomberg has reported that DNK, the mutual insurance company that covered one of the stricken oil tankers yesterday, is to raise its rates for war insurance, while insurer Hellenic War Risks Club has reportedly said that it will most likely increase an additional premium that owners pay when sailing to the Persian Gulf, with immediate effect.
It’s understood that Boskalis, a Dutch marine engineer has been appointed to salvage both tankers that were hit.
Global marine insurers will undoubtedly be watching the situation in the Gulf region very closely, and it’s fairly likely that more insurers will push to raise premiums in light of widespread uncertainty and political instability in the region.
An article on Loyd’s List notes that Neil Roberts, head of marine underwriting at the Lloyd’s Market Association (LMA), told the publication that “It’s down to underwriters to react as they think fit based on the specifics.”
It remains unclear who is responsible for the most recent attacks and exactly what caused the explosions, although news reports state that the U.S. has been quick to blame Iran.