War-risk insurance premiums on Gulf shipping routes have surged by 200–300 per cent in recent months — and by more than 1,000 per cent in the riskiest cases — as escalating geopolitical tensions across West Asia force insurers to reprice maritime exposure, according to an analysis by Equirus Raghnall Insurance Broking released on 23 July. The spike threatens to raise India's crude oil import costs if disruptions persist.

How Far Premiums Have Climbed

Premiums for the most exposed voyages have reportedly risen from a range of 0.2–0.5 per cent of a vessel's insured value to as high as 3–5 per cent, according to the report. That represents a multi-fold increase in a cost that shipping operators typically treat as a pass-through to cargo buyers.

The jump is not confined to headline war-risk cover. Hull and machinery exposure and vessel security costs have also risen, compounding the overall freight burden on routes transiting or originating in the region.

What the Industry Says

Amit Goel, Director at Equirus Raghnall Insurance Broking, said the combined pressure of higher war-risk premiums, hull exposure, and security costs will push up the landed cost of crude imports into India. 'The increase in war-risk premiums, together with higher hull and machinery exposure and related security costs, will raise the landed cost of crude imports into India,' Goel said.

He added that even without a formal closure of key shipping lanes, insurers and reinsurers are likely to reassess risk models, resulting in tighter underwriting norms and, in some cases, reduced insurance capacity for Gulf-linked voyages.

Wider Impact on Indian Energy Imports

The report warns that the fallout may extend beyond Middle Eastern crude shipments. Prolonged disruption could tighten global marine insurance capacity, pushing up costs for Russian crude shipments to India as well — particularly if tanker availability declines or vessels are compelled to operate in elevated-risk environments.

Insurance is only one component of overall logistics expenses, the report noted, but sustained increases in war-risk pricing could materially raise the landed cost of crude oil, given that West Asia remains a primary sourcing corridor for Indian refiners.

India's Marine Insurance Market at Stake

According to Goel, India's marine insurance market is currently estimated at ₹5,500 crore–₹5,800 crore. He expects marine insurance pricing to remain firm in the near term as geopolitical developments continue to drive war-risk premiums higher, though a sustained easing of regional tensions could eventually moderate pricing pressure.

This comes amid a broader pattern of maritime risk repricing that has accelerated since late 2023, when attacks on commercial vessels in the Red Sea and surrounding waters prompted Lloyd's of London and other major underwriters to expand their listed areas — the zones where war-risk cover is mandatory and separately priced. The Gulf of Aden and parts of the Arabian Sea have seen the sharpest recalibrations.

What Happens Next

With no near-term resolution to the underlying geopolitical tensions in sight, shipping operators and Indian refiners face a sustained period of elevated voyage costs. Industry observers expect further tightening of underwriting norms if incidents at sea continue, which could reduce the pool of vessels willing to operate on high-risk routes and further squeeze capacity.