Shipping Insurance Cost Rise: The impact of ongoing tension in the Middle East is now visible on maritime trade as well. In many places, taking insurance for ships has become expensive. Some insurance companies are also avoiding providing cover due to the risk. Due to which shipping activities are being affected.

This time the situation seems a little different. The matter is not limited to the oil route problem of the Strait of Hormuz. Insurance cost itself is becoming a big problem. In particular, the war-risk premium for ships passing through the Strait of Hormuz has increased from about 0.2–0.25 percent earlier to 1 percent or more. Due to which the operation expenses are increasing rapidly. Let us know about this topic.

Expensive insurance increases the challenge of shipping

The cost of a big oil tanker ranges from Rs 1,500 crore to Rs 2,500 crore. In such a situation, if there is a difference of 1 percent in the insurance rate, the expenditure increases to several crores of rupees in just one journey. Due to which the overall cost is affected.

Increasing operational costs of companies

A large part of global oil passes through the Strait of Hormuz. In such a situation, many companies are choosing the safe route and making the long journey through Africa. Due to which additional time of 10–15 days is being taken and operational cost along with fuel is also increasing. In many cases, insurance companies are even refusing to provide insurance.

Problems increased due to not getting insurance

According to the report of news agency Reuters, marine insurance companies in some parts of the Gulf region are now refusing to provide war-risk cover to ships. This has created a serious challenge for the shipping companies, because ships cannot be operated without insurance.

Insurance is necessary for cargo financing, port entry or contract completion. In such a situation, a challenge has arisen before the ship owners. They are left with only two options, either buy insurance at an expensive premium or do not do business through the risky route.

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