Experts in the insurance industry have confirmed that the London-based Joint War Committee (JWC) has not announced any increase in the risk of war on ships in the Arabian Gulf, since the 19 July seizure of a British tanker by Iran in the Strait of Hormuz, said media reports.
The seizure does not fall within the concept of war and military operations, and indicated that it could be categorised as piracy, Mr Eid Al-Nasser, former chairman of the insurance committee of the Eastern Province Chamber, told Al Riyadh.
Insurance expert Ziad al-Qasim said that insurers are monitoring developments in the Gulf region. He said the seizure of the British vessel is not a military operation, but represents rather provocation and aggression and can lead to increased tension in the region. There are no military operations in the Gulf region and that the escalation of tension could lead to military operations, he noted.
Several insurers have been hiking premiums in May and June, the reports said. Premium increases can be decided by insurers, said Mr Imad Al-Din Al-Husseini, a member of the Insurance Brokers Committee of the Eastern Province Chamber. Prices can rise according to security developments despite the absence of a war resolution.
Joint War Committee
Following vessel explosions at Fujairah anchorage on 12 May this year, the JWC updated the war-listed areas to reflect the perceived heightened risk across the region. Vessels trading to the Gulf are now required to notify underwriters before entering the area. Whilst there are claims and counter-claims about specific points, the insurance market is faced with multiple million-dollar losses and will be keenly aware of the issues, including the high number of unknowns. Underwriters are following the situation closely and will be mindful of the many variables of risk when assessing further voyages in the region.
The JWC said the seizure on 19 July of the oil tankers Mesdar and the Stena Impero – in clear retaliation for the UK’s impounding of the Iranian tanker Grace 1 off the coast of Gibraltar for breaching sanctions on Syria – demonstrated that Iranian capability extends beyond the particularly vulnerable Strait of Hormuz itself. A general threat exists to all tanker traffic transiting Hormuz. However, the subsequent release of the Mesdar suggests that Iran wishes to keep its actions proportionate, one for one. For the present, although a step on the escalation staircase has been ascended, the situation remains under comparative control.
The JWC said, “The enmity between Iran and Saudi Arabia continues to add to the complexities in the region with the Saudis believing Iran is trying to control strategic waterways. The situation will be kept under close review.”
The JWC comprises underwriting representatives from both the Lloyd’s and International Underwriting Association (IUA) markets, representing the interests of those who write marine hull war business in the London market. M