Marine War Risk Insurance for Indian Vessels in the Persian Gulf

India's energy economy is structurally anchored to the Persian Gulf. More than 85% of India's crude oil imports transits through the Strait of Hormuz, the Gulf of Aden, and associated waters. In volume terms, India imported approximately 232 million metric tonnes of crude oil in fiscal year 2024-25, the overwhelming majority originating from Saudi Arabia, Iraq, the UAE, Kuwait, and increasingly Russia (routed via Suez). The chokepoints at the Strait of Hormuz (where Iran and the UAE's coastlines sit 33 nautical miles apart) and the Bab el-Mandeb Strait (the southern entry to the Red Sea, 18 nautical miles at its narrowest) represent some of the highest-concentration shipping lanes in the world.

Indian shipping's stake in these waters has grown with the ambitions of the Shipping Corporation of India (SCI), Essar Shipping, Great Eastern Shipping, and a growing private-sector fleet of VLCC (Very Large Crude Carrier) and Suezmax tankers. The Directorate General of Shipping (DGS) under the Ministry of Ports, Shipping and Waterways maintains the Indian fleet register, which includes vessels flagged under the Indian flag as well as Indian-controlled vessels flagged in flag-of-convenience registries.

For every Indian-owned or Indian-flagged vessel transiting through these waters, the standard marine hull and P&I policies are insufficient. War and related perils — piracy, missile strikes, drone attacks, mine incidents, seizure by military or paramilitary forces — are excluded from all standard marine hull policies under the Institute Time Clauses (Hulls) 1983 and the International Hull Clauses 2003. Separate war risk coverage is mandatory in practice for any vessel trading in or through the Persian Gulf, the Strait of Hormuz, the Gulf of Aden, and the Red Sea.

The Houthi campaign against commercial shipping in the Red Sea and Gulf of Aden, which began in earnest in October 2023 following the outbreak of the Israel-Gaza conflict, has imposed the most material change to the war risk insurance market in these waters since the tanker wars of the 1980s. Understanding the current market — its structures, its pricing, its exclusions, and its interaction with Indian regulatory requirements — is essential for Indian shipowners, charterers, cargo interests, and the refiners and trading companies who bear ultimate freight risk in their crude procurement contracts.

The Joint War Committee (JWC) is a joint committee of Lloyd's Market Association (LMA) and the International Underwriting Association (IUA). It maintains and periodically updates the Hull War, Strikes, Terrorism and Related Perils Listed Areas, commonly called the JWC Listed Areas. When the JWC adds a geographic zone to the list, vessels entering that zone trigger two immediate consequences: they must notify their hull war risk underwriters before entry (notification obligation under the war risk policy), and they must pay an Additional Premium (AP) to maintain coverage while in the listed area.

As of November 2025, the JWC Listed Areas relevant to Indian crude shipping include the Gulf of Aden, the Red Sea (both northern and southern sectors), the Bab el-Mandeb Strait, the Persian Gulf (specific zones within), the Strait of Hormuz, and the Gulf of Oman in specified sub-areas. The listing of the entire southern Red Sea and Bab el-Mandeb was triggered by the escalation of Houthi operations in late 2023.

The Additional Premium for transit through JWC Listed Areas is quoted on a per-voyage basis and is expressed as a percentage of the vessel's insured value. Before the Houthi escalation in October 2023, AP rates for the Gulf of Aden were in the range of 0.05% to 0.10% per voyage for a standard VLCC. By mid-2024, AP rates for the southern Red Sea and Bab el-Mandeb had spiked to 0.5% to 1.0% per voyage for some vessel types — a ten- to twenty-fold increase. For a VLCC with an insured hull value of USD 100 million, a 0.5% AP represents USD 500,000 per voyage, transforming the economics of Red Sea transiting.

The AP is charged by the hull war risk underwriter, not the standard hull insurer. Most Indian vessels' hull war risk is placed in the London market (Lloyd's syndicates) or with GIC Re acting as the domestic reinsurer. The notification and AP mechanics are standard across the London market and are documented in the policy's war risk extension clause.

A common confusion among Indian shipping companies, particularly those newer to international trade, is treating hull war risk and war risk P&I cover as interchangeable. They are not. They cover different interests and are placed with different underwriters.

Hull war risk insurance covers physical damage to and total loss of the vessel arising from war and related perils. The standard hull war risk policy is the Institute War and Strikes Clauses (Hulls — Time) 1983 (amended by subsequent addenda) or the equivalent under the International Hull Clauses 2003. Covered perils include war, civil war, revolution, rebellion, insurrection, hostile act by a government or sovereign power, capture, seizure, arrest, restraint or detainment, mines and torpedoes, confiscation, and — relevant to the Houthi context — derelict weapons of war. Piracy is covered under the standard hull policy rather than the war risk policy in most London market wordings, which has created some claims interpretation complexity when Houthi operations involve elements of both piracy and warfare.

P&I war risk cover is a different animal. The standard P&I entry covers liability to third parties (crew, cargo interests, collision, wreck removal, pollution) on the basis that the vessel is operating in normal commercial waters. When a vessel enters a JWC Listed Area, its standard P&I entry may be cancelled at short notice — the Clubs (International Group of P&I Clubs) issue a 7-day automatic cancellation notice when a vessel enters certain designated high-risk areas, consistent with the P&I rule requirement for prior notification. The shipowner must then separately negotiate P&I war risk cover, which extends the Club's protection to cover third-party liabilities arising from war perils.

P&I war risk extensions typically cover:

• Liability for crew injury, illness, and death arising from war perils (this is the primary crew war risk benefit from the P&I perspective)
• Stowaways encountered in war risk transit areas
• Wreck removal obligations after a war-related sinking
• Oil pollution liability after a war-caused tanker casualty

The P&I war risk extension is placed through the vessel's P&I Club, with the war risk pool managed through the International Group War Risks Panel. The premium for P&I war risk extension in JWC Listed Areas is typically expressed as a daily rate per gross tonne. Since the Houthi escalation, daily rates for Red Sea P&I war risk have increased substantially, reflecting the Club's actuarial assessment of the crew injury and wreck removal exposure.

Hull war risk and P&I war risk cover the loss when it occurs. The CONWARTIME and VOYWAR clauses determine who bears the economic cost of war risk transit as between the shipowner and the charterer.

CONWARTIME 2013 (the BIMCO standard form) is the clause most commonly incorporated into time charter parties. It gives the master and shipowner the right to deviate from a voyage, refuse to enter a port, or take prudent avoiding action where, in the master's reasonable judgment, the vessel would be exposed to war, warlike operations, acts of piracy, terrorism, or related threats. Critically, if the charterer instructs the vessel to enter a JWC Listed Area where war risk applies, the charterer must pay the additional insurance premium (the AP) and any crew war bonus. The charterer cannot withhold instructions simply because war risk exists, but they absorb the additional insurance cost.

VOYWAR 2013 is the equivalent clause for voyage charter parties. It operates similarly, allocating war risk additional costs (AP and crew bonuses) to the charterer when the voyage routing takes the vessel through a JWC Listed Area.

For Indian state-owned refiners — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — who buy crude oil primarily on a delivered (CIF) basis, the war risk AP does not directly appear in the insurance bill; it is embedded in the freight rate quoted by the vessel owner or trader delivering the crude. When AP rates spiked after October 2023, crude CIF prices to India from Middle Eastern sellers rose by USD 1 to 3 per barrel on the freight component alone, depending on vessel type, voyage origin, and transit routing — a material impact on the landed cost of crude for Indian refiners processing 5 million barrels per day.

Indian private refiners — Reliance Industries and Nayara Energy (formerly Essar Oil) — who charter vessels in the spot market more actively, engaged with CONWARTIME mechanics directly. Reliance's chartering team, managing one of the largest crude purchasing books in Asia, had to renegotiate freight terms and charter party war risk clauses during Q4 2023 and into 2024 to manage the dramatically changed AP environment.

Under Indian law, the Directorate General of Shipping (DGS) — operating under the Ministry of Ports, Shipping and Waterways — has issued guidelines requiring that Indian seafarers employed on vessels trading in designated war risk areas be entitled to a war risk bonus in addition to their normal wages. This requirement applies to Indian-flagged vessels and, under bilateral service conditions, to Indian seafarers employed on foreign-flagged vessels.

The DGS war bonus requirement is separate from the hull and P&I war risk insurance discussion above. It is a labour compliance obligation, not an insurance product. However, it intersects with the P&I war risk cover because the P&I Club's war risk extension for crew injury and death covers liabilities arising from these crew members' war risk exposure, including unpaid war bonuses if the vessel is lost.

The war risk bonus for Indian seafarers serving on tankers in the Gulf of Aden and Red Sea has, since the Houthi escalation, typically been negotiated at USD 500 to 1,500 per month per seafarer, depending on rank and the specific transit area. For a VLCC with a crew of 28, this represents an additional crewing cost of USD 14,000 to 42,000 per month while operating in the designated area. Indian shipping companies factor this cost into voyage economics when bidding for spot charters.

Indian maritime unions, including the National Union of Seafarers of India (NUSI) and Maritime Union of India (MUI), have been active in demanding enhanced war bonuses during the Houthi escalation period, arguing that the drone and missile threat to commercial vessels in the Red Sea corridor represents a fundamentally different risk profile than historical piracy. The union position is that the war risk bonus should be a multiple of the standard rate when the vessel is within range of documented Houthi missile attacks, which historically have had a range exceeding 200 nautical miles from the Yemeni coast.

The sequence of events that reshaped the Persian Gulf and Red Sea war risk insurance market is worth tracing in some detail, because the changes have been rapid and the market has not fully stabilised as of November 2025.

In October and November 2023, following the outbreak of the Israel-Gaza conflict, the Houthi movement began targeting commercial vessels transiting the southern Red Sea and the Bab el-Mandeb Strait, initially vessels with Israeli ownership or Israeli port calls. The scope of targeting broadened progressively to include US-affiliated vessels, then vessels calling at Israeli ports, and eventually a range of vessels with perceived Western affiliations, whether real or based on flag, charterer, or cargo origin.

The first market response was a rapid expansion of the JWC Listed Areas to include the entire Red Sea south of approximately 15°N latitude and the Gulf of Aden. War risk AP rates for vessels transiting these waters, which had been at historic lows of 0.05% to 0.10% per voyage for the Gulf of Aden, spiked to 0.3% to 0.5% by December 2023 and reached 0.7% to 1.0% for certain vessel types and routes in Q1 2024.

For Indian tankers specifically, the risk profile varied by vessel ownership, flag, and cargo. Vessels carrying Indian cargo on behalf of Indian state refiners were not initially among the Houthi's stated targets, and several Indian-managed vessels continued to transit the Red Sea in Q4 2023 without incident. However, targeting expanded, and by early 2024 the distinction between Indian-flagged/managed vessels and other vessels had narrowed practically. Several vessels with Indian crew and partial Indian ownership received war risk AP notices from their underwriters and were required to pay at commercial rates regardless of the cargo or charterer nationality.

The alternative routing — Cape of Good Hope diversion, adding approximately 3,500 to 4,000 nautical miles and 10 to 14 days to a Europe-bound voyage from the Gulf — became the default for many operators by Q1 2024. The freight rate premium for a non-Red Sea routing VLCC on the Middle East Gulf to India route widened to USD 2 to 4 per metric tonne over the Red Sea routing in the peak disruption period, though the spread compressed as the market adjusted. Indian Oil Corporation publicly stated in Q1 2024 that it was managing increased freight costs of approximately INR 500 to 700 crore annualised due to the Red Sea disruption.

By Q3 and Q4 2024, some stabilisation occurred as US and coalition naval operations in the region improved the security environment, but the JWC Listed Areas were not removed, and war risk AP for Red Sea transits remained at multiples of their pre-October 2023 levels as of November 2025.

General Insurance Corporation of India (GIC Re) functions as India's national reinsurer and, under the mandatory cession requirement of the IRDAI (Reinsurance) Regulations 2018, receives a mandatory cession from every Indian insurance company's reinsurance programme. For marine war risk placed with IRDAI-registered insurers in India, GIC Re is a significant reinsurance capacity provider.

GIC Re's marine war risk underwriting capability has been built progressively in collaboration with international markets. For Indian-flagged vessels, GIC Re participates in war risk reinsurance treaties with London and other markets, allowing Indian marine insurers to offer war risk cover backed by GIC Re's reinsurance support. The mandatory cession gives GIC Re visibility into the Indian marine insurance market's war risk exposure, which is relevant for systemic risk management when a cluster event (such as the Houthi attacks) simultaneously threatens multiple Indian-insured vessels.

The practical limitation of GIC Re's domestic market for war risk is capacity. For a fleet of modern VLCCs with insured hull values of USD 80 to 120 million each, the aggregate war risk exposure on even a modest Indian tanker portfolio exceeds what GIC Re and Indian primary insurers can absorb domestically. The market practice for Indian vessel owners is to place war risk directly in the London market (Lloyd's syndicates: Skuld, North P&I, Steamship Mutual for P&I; specialist hull war risk syndicates for hull) with GIC Re's participation limited to the domestic portion of the risk that must be placed in India under the mandatory cession framework.

On the operational side, the Indian Navy has been conducting escort operations in the Gulf of Aden since the resurgence of piracy concerns and has maintained a naval presence in the region. The INS deployments are documented in Indian Navy operational reports. However, naval escort does not eliminate the war risk insurance requirement — underwriters cannot rely on naval escort as a risk mitigation that reduces AP, because escort availability is not guaranteed for every transit and does not cover missile or drone attack scenarios.

The International Maritime Organization (IMO) has designated specific transit corridors in the Gulf of Aden — the Maritime Security Transit Corridor (MSTC) — and the broader Maritime Security Communications with Industry (MSCHOA) coordination zone. Indian vessels transiting these corridors are required to register with MSCHOA and follow the prescribed routing. JWC underwriters expect vessels to follow IMO-recommended corridors when transiting Listed Areas; deviation from recommended corridors without prior insurer notification can be grounds for challenging a war risk claim arising from a transit loss.

ITOPF (International Tanker Owners Pollution Federation) interaction with war risk is relevant for Indian tanker operators. ITOPF provides technical advisory services and responds to oil spill incidents involving tankers. A war-caused tanker casualty in the Gulf — for example, a missile strike causing a hull breach and oil spill — would involve both the hull war risk insurer (for the hull loss) and the P&I war risk underwriter (for the pollution liability). ITOPF's response costs are P&I-covered liabilities, and the P&I war risk extension must be in place for the Club to respond to a war-caused pollution incident.

The three Indian state-owned refiners — IOC, BPCL, and HPCL — collectively process approximately 4.5 to 5 million barrels per day of crude oil, the majority imported through the Persian Gulf route. Their approach to war risk is shaped by the structure of their crude procurement contracts, which determine whether the war risk insurance obligation sits with the seller (CIF terms) or the buyer (FOB/CFR terms).

The majority of India's state refinery crude purchases are on CIF (Cost, Insurance, Freight) terms, particularly from Middle Eastern national oil companies (Saudi Aramco, ADNOC, KPC, KNPC). Under CIF terms, the seller arranges freight and insurance up to the port of destination. The seller's freight arrangement includes war risk cover for the vessel, and the cargo insurance (covering the crude cargo rather than the vessel) is also arranged by the seller. The Indian refiner receives the crude at the port and is not directly responsible for hull or war risk during transit.

However, two complications arise in the CIF structure under heightened war risk conditions.

First, the cargo insurance component of the CIF arrangement — covering the crude cargo's value rather than the vessel — may not adequately address war risk for the cargo. Standard cargo war risk cover is written under the Institute War Clauses (Cargo) 1982, which covers war-related physical damage to or loss of the cargo. The premium for cargo war risk in JWC Listed Areas is additional to the standard cargo insurance premium and has increased with the Houthi escalation. Under CIF terms, this additional cost is ultimately reflected in the CIF price the Indian refiner pays.

Second, for purchases on FOB (Free on Board) terms — used by Indian refiners when chartering vessels in the spot market or when buying crude from traders at the load port — the Indian refiner is responsible for arranging voyage charter terms and, through the charter, carries the economic risk of the AP. Indian state refiners' shipping departments have developed internal protocols for chartering during heightened war risk periods, including approval thresholds for AP rates and guidelines on Cape of Good Hope routing versus Red Sea transit based on the current AP rate environment.

Reliance Industries' Jamnagar complex, the world's largest single-location refining complex, processes crude from across the Middle East and increasingly from Russia and the Americas. Reliance's chartering and insurance teams are among the most sophisticated in Indian industry, maintaining direct relationships with London market war risk underwriters and actively managing AP costs through voyage planning, fleet deployment choices, and charter party negotiation. Reliance has, at various points since October 2023, chartered VLCCs routed via the Cape specifically to avoid war risk APs when the Cape routing economics were more favourable than the Red Sea routing plus AP.

For the practical management of war risk across a large crude purchasing programme, Indian refiners and their shipping counterparts maintain war risk registers — internal logs of vessels in their fleet or on time charter, their hull war risk insurer and policy details, the AP rates currently applicable, the notification obligations, and the crew war bonus obligations. These registers feed into the voyage approval process, ensuring that no vessel is dispatched into a JWC Listed Area without confirming current coverage and paying the applicable AP.