By Bill Alpert

A shot across the bow isn't needed to halt a ship. An insurance notice will do.

Groups that insure ships against war losses announced they will pause coverage for vessels that sail the Persian Gulf and Gulf of Oman at midnight London time on Thursday because of risks due to the U.S. military operation in Iran.

War insurance mostly comes from nonprofit "clubs" of maritime insurers.

"The Club's reinsurers have issued a Notice of Cancellation in respect of war risks exposures in the Persian/Arabian Gulf," the American Steamship Owners Mutual Protection and Indemnity Association said on Sunday. "The Club is exploring possible solutions to provide a reinstatement of cover on an individual risk basis."

If coverage is reinstated, insurers will decide how much to raise premiums. Traders seemed to see an opportunity for reinsurers, as shares of those companies rose Monday, while the rest of the stock market wavered.

Over a hundred ships were in the Persian Gulf and Gulf of Oman when the U.S. and Israel attacked Iran on Saturday. Iran has fired on nearby ships and ports and said no ships will be allowed to pass. A fifth of the world's oil passes through the choke point of the Strait of Hormuz.

Most marine insurance policies don't apply within war zones. Since the 1800s, shipping insurers have pooled together in mutual insurance clubs that sell separate coverage for losses to ships and cargo caused by war, terrorism, and piracy. Ship movements and war zones change quickly, so policies often run for just a week at a time.

The U.S. club is one of a dozen around the world that sell this separate line of insurance, with British and Scandinavian clubs having the longest histories. While the local clubs compete, they also join together in an international group to buy reinsurance for the largest claims.

The International Group of P&I Clubs said Monday it is closely monitoring military operations in the Persian Gulf.

Insurance broker Marsh said coverage may be available from other sources, but at prices likely 50% higher than before the conflict with Iran started. And those prices may change if Iran and allies such as Yemen's Houthi rebels continue firing on commercial ships.

Those higher premiums ultimately go to pay Bermuda reinsurers and Lloyds syndicates. There has been excess capacity in the market for property and casualty reinsurance, and the resulting weak pricing led to a couple of years of mediocre returns for stocks such as RenaissanceRe Holdings, Arch Capital Group, and Everest Group.

But traders may think a Mideast conflict will be good for these names. The reinsurance stocks remained up 1% to 2% Monday afternoon, even as the rest of the stock market leveled off after digesting the weekend's news.

Write to Bill Alpert at william.alpert@barrons.com

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March 02, 2026 17:04 ET (22:04 GMT)

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