00:03A new battlefront in the Iran War is unfolding far away from the missiles.
00:09It is happening inside the offices of London's marine insurers.
00:14And the weapon is not a missile. It is the price of insurance.
00:19As tensions rise around the Strait of Hormuz and the Red Sea,
00:23insurers are dramatically repricing the risk of sending ships through these critical waterways.
00:29And that creates a problem for Iran's enemies.
00:33Because Iran does not necessarily need to hit every ship.
00:38It may only need to make shipping look dangerous enough.
00:42Here is how the insurance war works.
00:45Normal ship insurance generally does not cover war-related risks.
00:50So when a vessel enters a conflict zone, its owner may need separate war risk coverage
00:56with an additional premium negotiated for that specific voyage.
01:01The London market plays a major role here.
01:04The joint war committee, made up of underwriting representatives of the Lloyds and wider London insurance markets,
01:11identifies areas considered to carry enhanced war risk.
01:16And when the perceived risk rises, the price can rise very quickly.
01:21In July, reports put additional war risk premiums for some Hormuz voyages at between 3 and 10 percent of a
01:31ship's hull value,
01:32compared with roughly 0.25 percent before the war.
01:37Think about what that means.
01:38For a ship worth $100 million, a 10 percent war risk premium could mean around $10 million.
01:47That is not a small operating cost.
01:50It can fundamentally change whether a voyage makes commercial sense.
01:54And there's another layer to this.
01:57The Red Sea and Baab el-Mondib are also under pressure.
02:00After attacks linked to the Iran-aligned Houthis, London insurers expanded the high-risk area in the Red Sea.
02:09Premiums for some Saudi-linked routes jumped sharply,
02:13with southern Red Sea cover reported at around 1 to 2 percent of vessel value.
02:18So now, ship owners are facing a brutal calculation.
02:23Do you send the vessel through a dangerous choke point?
02:26Pay millions more for insurance?
02:28Potentially pay higher freight costs?
02:31Or take a much longer route around Africa?
02:35All three choices cost money, and those costs do not necessarily stay with the shipping company.
02:41They can eventually reach the price of oil, LNG, freight, and everyday goods.
02:48That's where this becomes a global problem.
02:52The Strait of Hormuz is one of the world's most important energy choke points.
02:56If fewer ships are willing to cross it, energy supplies can tighten.
03:01If insurance becomes prohibitively expensive, some operators may simply wait.
03:07And if ships reroute, they burn more fuel, spend more time at sea, and require more capacity.
03:15This is why insurance can become an economic weapon without being a coordinated weapon.
03:21The insurers are not acting as a political army.
03:25They are responding commercially to the risk they see.
03:28The Joint War Committee itself says the listed areas are about identifying enhanced risk,
03:35while the actual insurance pricing is negotiated between individual underwriters and brokers.
03:40But the effect can still be enormous.
03:44A missile strike can damage one ship.
03:46A credible threat can make hundreds of ship owners reconsider entering an entire region.
03:52And that is the power of the atmosphere of risk.
03:56We've already seen how quickly this market can react.
03:59In March, insurers said Middle East war cover remained available,
04:04but additional premiums were being applied based on the increased danger.
04:09By July, some Hormuz premiums had reached extreme levels,
04:14while insurers were becoming more reluctant to provide spot coverage.
04:17And London has even created additional insurance capacity to keep ships moving through Hormuz,
04:24showing just how important the insurance layer has become to global trade.
04:29Now comes the bigger question.
04:31Can these rising costs create pressure on governments to end or de-escalate the war?
04:38Possibly, but it's not automatic.
04:40Governments can respond with naval escorts.
04:43They can create state-backed insurance schemes.
04:46They can use strategic reserves.
04:48And they can provide additional guarantees to keep shipping moving.
04:52But all of those measures ultimately have a cost.
04:56And for America, the pressure is particularly important.
05:00Even though the United States produces large amounts of energy itself,
05:04global oil prices still affect American consumers, businesses, and inflation.
05:10Higher shipping costs also affect U.S.-linked trade and America's allies in Europe and Asia.
05:18So the insurance market creates a chain reaction.
05:22War raises risk.
05:23Risk raises insurance premiums.
05:25Higher premiums raise shipping costs.
05:28Higher shipping costs push up energy and trade costs.
05:32And those costs create political and economic pressure.
05:36That's the real insurance war of Iran.
05:39The battlefield may be thousands of kilometers away, but the bill can arrive everywhere.
05:45And if the threat remains high for long enough,
05:48the most powerful weapon may not be the missile that hits a ship,
05:53but the insurance premium that makes the next ship think twice before sailing.
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