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Monday, 13 January 2020

Marine Insurance & Freight Rates Rise with Middle East Tensions

While tensions between the US and Iran have lessened in recent days the events in the Middle East have made their mark in the insurance industry in particular.

Ships are navigating longer routes to avoid dangerous areas, Ships’ crew wages will rise owing to the heightened risks of attacks to Vessels in the Strait of Hormuz, adding costs to end consumers for commodities transported globally, hampering trade.

The recent tensions are leading to insurers and reinsurers imposing new conditions in policies, significantly increasing the costs of insurance. Industry experts forecast significant increases of about 10% over the coming months.

Similarly as ships need to steam further the owners will need to recover their operating costs in this region of the world.

The attacks on two Saudi Arabian tankers, a Norwegian and a UAE flagged vessel have led to the Joint War Committee, made up of representatives from the Lloyd’s and company markets, adding the Gulf to its list of high-risk waters.

Navy vessels of various nations are now escorting merchant ships through high risk waters to reduce the risks to shipping as part of Combined Military Force. Australia has deployed HMAS Toowoomba, a frigate, to region as part of this effort.



Other participating nations include Canada, Denmark, France, Germany, Italy, Republic of Korea, Netherlands, New Zealand, Pakistan, Portugal, Singapore, Spain, Turkey, the United Kingdom and the United States

If you would like any advice on your situation on shipping through this region please contact me.

All for now,

Brad Skelton

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