TATA AIG General Insurance excludes Red Sea route, others raise premiums

Mumbai: Tata AIG General Insurance has excluded the Red Sea shipping route from standard marine insurance after rebel attacks on vessels in the area, while other insurers are raising premiums for cargo being carried through the vulnerable water channel that helps slash the maritime distance between continental Europe and Asia.

Cancellation notices in relation to war, terrorism, and piracy risks in the surrounding areas of the Indian Ocean, the Gulf of Aden and the Southern Red Sea have been sent out effective January 6.

With ships passing through the region becoming the target of increasing attacks and the resultant declaration by the JWC of Lloyds and other reinsurers of these waters as a high-risk area for shipping, major global shipping companies have proactively decided to avoid taking this route, a Tata AIG spokesperson said.

“Therefore, we have duly notified our clients of the increased risk to their cargo and consequent cancellation of cover,” the spokesperson said. “Where clients still have cargo transiting through the high-risk areas, we have provided the option to continue cover for such transit in high-risk areas on payment of an additional war risk premium.”

Insurers have raised premiums, while others are issuing notices of cancellations of policies related to war, terrorism, and piracy risks in areas like the Indian Ocean, Gulf of Aden, Southern Red Sea, and Cabo Delgado.

Some insurers have cancelled war and strike cover for oil companies taking this route. There are cancellation clauses mentioned as part of policies and insurers use it as a cautionary measure during times of high risks. The Cancellation clause in the policy gives either party, the insurer or the insured to cancel the policy after giving 30 days notice.