Testing the limits of war risk – increased relevance of war risk clauses

War risk insurance (“WRI”) has, at least in legal circles, been something of the quieter problem child over the years in the English Courts. To name but two cases, they include the Silva involving a finding of state-backed extortion, which unsurprisingly was held not to constitute “ordinary judicial process”; and the B Atlantic that recently went all the way to the Supreme Court, debating the meaning of “malicious acts” in the context of a drug-smuggling detention. To those who are unfamiliar with the WRI clauses, it comes as a surprise that a good number of the leading WRI authorities do not involve war at all.

WRI has long been a critical component of marine insurance but one that has in recent years come under some scrutiny as global conflicts and sanctions increasingly impact commercial shipping. With rising geopolitical tensions and frequent disruptions to key shipping routes, understanding WRI is more important than ever for shipowners, operators, and insurers.
   

What is WRI?

WRI is a specialised policy that covers losses arising from war, conflict, piracy, and terrorism—risks typically excluded from other marine insurance policies. When a shipowner purchases a WRI policy it runs alongside the vessel’s other insurance (i.e. H&M and P&I) and can apply to all types of marine operations from private yachts to cargo ships and tankers. Of particular significance, however, WRI also covers seizure, arrest, detention for political purposes (as opposed to simply commercially motivated detentions, or detentions brought about by reason of customs infringements, which are excluded) even when there is no active war/hostilities.

When a vessel is due to enter into a high-risk area ((“HRA”) as set by the Joint War Committee (“JWC”) and discussed below) during a voyage, an insurer typically requires advance notice and an Additional Premium (“AP”) may be charged for that voyage to take into account the increased risk of a war-related loss. This may include, for example, missile strikes, seizure of the vessel by armed forces, drone attacks or the vessel hitting a sea mine.

That means the base price for WRI is very cheap; that is unsurprising because assuming a vessel is sailing in peaceful territories, the risk of loss/damage caused by some form of “war risk” is inherently unlikely: it is when the vessel is to trade to an HRA that naturally an insurer wants to know about this, and be entitled to earn the premium that accompanies the increased risk.
   

The role of JWC

The JWC is a body of representatives from the London market, including underwriters from the Lloyd’s Market Association (“LMA”) and the International Underwriting Association. The JWC plays a central role in monitoring global geopolitical developments to identify war risks.

In February and early March 2026, it was reported that several insurers were pulling war risk cover for vessels travelling through the Strait of Hormuz. However, on 23 March 2026 the LMA issued a statement in response to clarify that standard provisions were already included in shipowners’ contracts to allow flexibility for renegotiation for an “increased risk to vessels”. These mechanisms were included within contracts to allow insurers to offer lower premiums during peacetime with scope to reassess in the event of an increased risk.
   

Increased relevance of war risk clauses

As a result of the ongoing geopolitical situation, the maritime industry has suffered severe damage, financial losses and – tragically – loss of life.

WRI is therefore an essential component of marine risk management for vessels, especially those trading in high-risk areas.
  

Middle East tensions

The continued escalation of tensions around the Persian Gulf have disrupted shipping flows through the Strait of Hormuz, which has in turn impacted global supply chains and maritime transport. The impact is felt more widely than the active war zones, creating uncertainty around shipping routes, sanctions and the insurability of voyages.

Although it depends who you talk to, in circumstances where the risk is effectively unquantifiable, appetite for risk varies and premium increases. Vessels avoiding the Gulf are rerouting, adding significant distance and delay giving rise to bigger picture issues, claims and losses.

The risk of cyber-attacks has also risen as tensions become digitalised, threatening to disrupt navigation, communications, cargo handling and other operations, with both physical and financial consequences. The financial losses as a result of a cyber attack can be significant, however more sophisticated attacks may interfere with equipment, disable navigational equipment and ultimately create risks not only financially but also to property and human life. The issues surrounding cyber exclusions/buy-backs is a whole topic in its own right.
  

Russia/Ukraine conflict

The invasion of Ukraine in 2022 dramatically changed the war risks insurance landscape. Following the invasion, the WRI market developed rapidly, with one of the most immediate consequences being the designation of the Black Sea and Sea of Azov as high-risk trading areas.

Wide ranging international sanctions were imposed by the United Kingdom, European Union and the United States targeting Russia’s economy, including the oil sector, to impact on revenues and therefore the war effort. These sanctions also led to a rise in the deployment of dark fleet tankers by Russia as a way to evade the Western sanctions, making use of flags of convenience and specific ownership/management structures to conceal the origins of cargo. It has therefore been vital for insurers to undertake extensive due diligence during the underwriting process, including into class certification and flag registry.
  

Claims issues

From a claims perspective, war risks present a number of complex issues as they often involve uncertain facts, high-value losses and constantly evolving geopolitical events.

The question of whether a conflict constitutes a “war” for coverage purposes has previously been left to the courts. However, Lloyds has proposed the creation of an independent panel to determine this question in a faster, more consistent approach than resorting to litigation. If such a panel is introduced, insurers will need to review their policies to ensure adequate definitions for “war” and whether policies remain fit for purpose.

A further claims issue is determining the proximate cause of the loss, as this can determine whether the loss falls under the WRI policy or the hull policy (or is excluded from cover under any policy). This is further complicated as gathering evidence is challenging where access to the vessel or cargo is limited and/or unsafe, with conflicting reports from governments or authorities and difficulty appointing surveyors.

During the course of this year, with the status of the Strait of Hormuz fluctuating from one week to another almost, there has been fierce debate amongst insurers and shipowners as to whether the blocking/trapping cover might be engaged: were the Straits blocked or not? Much depends on the policy wording of course, but the changes in status have made it difficult to discern the actual factual status (essential to understand before seeking to then undertake the relevant legal analysis).

Further, insurers may be legally prohibited from paying a claim if doing so would be acting in breach of sanctions in any relevant jurisdiction. Sanctions regimes have been expanded in response to the geopolitical landscape such that most policies now include wordings to ensure that insurers are not liable to provide cover or make any payments that would expose them to sanctions restrictions. There have been various recent English Court judgments dealing with sanctions issues, and making (or not) of payments where there were concerns that by doing so there might be infringements of sanctions.
  

Summary

In summary, with conflicts, sanctions, regional instability and increasing attacks on commercial shipping, WRI has become a central consideration for the maritime industry and has been – and is likely to continue increasingly to be - tested like never before. WRI continues to play a crucial role in allocating risk between parties, defining the scope of cover and establishing the circumstances in which insurers may suspend or terminate cover.

’This article was featured in The Marine Insurer.