Company's Unusual Business: War Risk Insurance for Shipping

In an era of escalating global conflict and geopolitical instability, many insurance companies are withdrawing from covering war-related risks. However, The Swedish Club, a mutual insurance company with roots in Gothenburg, has built its business precisely on managing these dangers for the maritime industry.

Most insurance policies today exclude war and war-like events, leaving businesses with international trade, shipping, or operations in volatile regions exposed precisely when the risks are highest. The Swedish Club, however, offers war risk insurance as a natural part of its services. "We are a mutual association owned by our members, the shipowners themselves, and our role is to represent their interests by offering relevant and responsible insurance solutions," says Thorbjörn Emanuelsson, head of risk assessment at The Swedish Club.

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We are a mutual association owned by our members, the shipowners themselves, and our role is to represent their interests by offering relevant and responsible insurance solutions. War risk insurance is therefore a natural part of our offering.

Within marine insurance, war risks are handled separately. Shipowners typically have this coverage as part of their basic insurance. "Special pricing and conditions apply when vessels operate in geographically defined risk areas. The conditions contain a termination mechanism, which allows for rapid adjustments of premiums, conditions, and risk areas as the risk picture changes," Emanuelsson explains. This is an integrated part of the structure, not an indication that coverage is withdrawn. In extreme systemic scenarios, standard clauses can even lead to automatic termination, for example, in a war between major powers.

Emanuelsson clarifies that the company's approach is to create long-term predictability within clear frameworks. When a vessel enters a defined risk area, a specific risk assessment is conducted. If the risk is deemed insurable, additional premiums and special conditions are set for the voyage and period. This protection is time- and location-limited, justifying short renegotiation windows. He adds that in situations like the current tensions in the Persian Gulf and the Strait of Hormuz, which have caused insurance premiums for ships to surge, it is important to distinguish between insurance availability and operational decisions, the latter being ultimately guided by safety.

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Special pricing and conditions apply when vessels operate in geographically defined risk areas. The conditions contain a termination mechanism, which allows for rapid adjustments of premiums, conditions, and risk areas as the risk picture changes. This is an integrated part of the structure, not an indication that coverage is withdrawn.