Shipping industry alarmed over skyrocketing war-risk insurance hikes

As US attacks hang over the Middle East, global maritime insurance companies decided to raise war-risk insurance rates, causing serious worries for domestic shipping companies.

According to the shipping industry on September 19, the War Risk Rating Committee based in London and Lloyd's Insurance delivered a notice regarding increases of as much as five times for war-risk insurance from September 27 to domestic shipping companies. The War Risk Rating Committee also revealed that it would terminate policies for companies that don't pay the new war-risk premiums. The increase amounts differ slightly for each company.

In the event rates do see a five-fold hike, Hyundai Merchant Marine will have to pay 195,000 dollars from its current 39,000 dollars on a monthly basis - just for war risk insurance.

Hanjin Shipping is also expected to pay 125,000 dollars monthly from 25,000 dollars. And SK shipping may see an increase up to 50,000 dollars from its current 10,000 dollar monthly premium.

A source in the industry said, "We will negotiate to reduce war risk insurance premiums as much as possible. The extra charges would be passed on to shippers if war risk charges apply, except for long term dedicated cargoes."