Synopsis: GIC Re stopped war risk cover for Gulf tankers from March 2026 due to oil war risks. Indian insurers lose reinsurance backing, can’t offer policies easily. Premiums rise globally, but India faces less business and costs mnot profits.
Tankers are going dark. In the Persian Gulf one of the world’s busiest oil corridors, ships are being rerouted, stranded, and left without insurance cover. The cause is an oil price war entangled with active conflict. And the fallout has now reached India’s insurance industry.
Since early March 2026, India’s state-owned reinsurer GIC Re has formally pulled out of marine hull war risk cover for the Persian Gulf, Gulf of Oman, Iran, and surrounding waters. That single decision has set off a chain reaction. Indian insurance companies, which depend heavily on GIC Re’s backing, can no longer offer war risk protection for tankers in the region. For many vessels, that means they are travelling without cover or not travelling at all.
To many observers, this might look like a windfall opportunity for insurers. War premiums are surging globally. Surely someone stands to profit? The reality, however, is far more complicated and for Indian companies, the crisis has brought disruption, not dividends.
How Ship Insurance Works The Basics Every Investor Should Know
Before understanding what is happening, it helps to know how marine insurance is structured. Ships are not insured the way cars or homes are. There are three main types of cover involved.
The first is Hull and Machinery Insurance. This covers the physical vessel, its structure, equipment, and engines. For most commercial ships, including oil tankers, this policy runs for one full year. It covers the ship for all voyages during that period, no matter how many trips it makes. Almost all active commercial vessels use this annual time-based policy. It is simpler and cheaper than renewing cover for every journey.
The second is Protection and Indemnity (P&I) Insurance. This covers third-party liabilities crew injuries, cargo damage, pollution, and collisions. P&I is provided by mutual clubs and also runs annually, typically from February 20 to February 20 each year.
The third is War Risk Cover. This is a separate add-on and works differently. While the base hull policy runs annually, war risk extensions are often applied voyage by voyage. A shipowner must declare that the vessel is entering a high-risk zone and pay an additional premium for that specific trip. This is where the current crisis bites hardest.
In normal times, Indian insurers would attach a war risk extension to an annual hull policy for tankers heading into the Gulf. Now, that extension has been effectively removed. Without it, a standard hull policy is useless for any tanker entering the Strait of Hormuz.
Cargo insurance, on the other hand, is arranged separately by the cargo owner, the oil company or trader rather than the shipowner. That, too, requires war risk cover for Gulf routes and is equally affected.
GIC Re Pulls Out and Takes the Market With It
India’s marine insurance market is dominated by four public-sector companies: New India Assurance, Oriental Insurance, United India Insurance, and National Insurance. Together, they control roughly 80 percent of the marine hull market. New India Assurance alone holds around 34 percent. Oriental Insurance follows at about 18 percent, United India at 16 percent, and National Insurance at 13 percent.
Private insurers such as ICICI Lombard, Reliance General, HDFC ERGO, and Tata AIG do operate in marine insurance. However, they hold less than 6 percent of the large international tanker hull business. They rarely lead on war risk exposures, especially for Persian Gulf routes.
The public-sector companies, therefore, are the backbone of Indian marine coverage. And they all rely on GIC Re General Insurance Corporation of India to reinsure large hull risks. Reinsurance is insurance for insurers. It lets a company take on a large policy by passing a portion of the risk to a reinsurer. Without that backing, the primary insurer cannot safely cover the full exposure.
When GIC Re withdrew war risk cover in early March 2026, the public-sector insurers lost their safety net for the Persian Gulf. As a result, they cancelled or restricted war risk extensions across the board. As a result, tankers heading to or from Gulf ports found themselves without the critical layer of protection they need.
International P&I clubs including Gard, Skuld, and NorthStandard issued similar cancellations around March 5, 2026. This left very few options for shipowners. The only remaining route is a single-voyage buy-back policy, typically priced between 0.25 percent and 1 percent or more of the vessel’s hull value. For a Very Large Crude Carrier (VLCC), that translates to roughly two to three million dollars per voyage. Most owners find that exorbitantly expensive.
Why Indian Insurers Are Not Benefiting From Rising Premiums
Globally, war risk premiums have surged dramatically. In some cases, they have risen more than tenfold from around 0.2 to 0.25 percent of vessel value to over 1 to 3 percent per voyage. In extreme instances, the increase has exceeded 1,000 percent. This sounds like a golden moment for any insurer willing to step in.
However, Indian insurers are not positioned to capture that opportunity. The high-premium war risk market is led by London-based underwriters and international P&I clubs. Indian companies are not the market leaders for this type of ultra-high-risk, large-hull tanker business. Furthermore, without GIC Re’s reinsurance support, they cannot safely take on these risks regardless of how attractive the premiums look.
In theory, an insurer could profit from single-voyage buy-back policies in less extreme zones areas just outside the strictest danger zones. Some selective underwriting may be happening. However, current data shows that most of this activity is flowing to international markets in London, not to Indian companies.
Moreover, the benefits are being offset by serious problems. Indian insurers are seeing their overall marine portfolio shrink. Ships are being rerouted away from Gulf routes, meaning fewer voyages and fewer premiums collected overall. Additionally, reinsurance capacity has dried up, making it expensive and difficult for Indian insurers to support even the business they might otherwise win.
Source: Reuters, LSEG Data
The broader economic consequences are mounting. Indian refiners import a large share of their crude oil from the Gulf. Disruptions in that supply chain push up logistics costs and fuel prices. These pressures feed back into the general economy and into the insurance sector as rising costs and tightening margins.
What Comes Next: India Looks for Alternatives
The situation remains fluid. India is actively exploring alternatives to plug the coverage gap. One option under discussion involves the US Development Finance Corporation’s political risk insurance. Indian officials are seeking clarity on whether this mechanism could backstop Indian-flagged or Indian-interest vessels operating in the Gulf.
For now, the Shipping Corporation of India (SCI) and the Ministry of Ports, Shipping and Waterways are coordinating India’s response. Shipowners with urgent cover needs are being directed primarily to New India Assurance, still the strongest starting point for tanker business and to GIC Re for any case-by-case reinstatements.
The Insurance Regulatory and Development Authority of India (IRDAI) is monitoring the situation. Updates may be available through the IRDAI or through aggregators. However, war risk for the Persian Gulf zone is unlikely to appear on standard platforms right now.
For investors watching insurance stocks, the key takeaway is this: the crisis is creating disruption, not a windfall. Indian marine insurers are absorbing reduced premiums, reduced volume, and increased reinsurance costs all at the same time. The companies best placed to survive are those with diverse portfolios and limited exposure to international war risks. Those heavily reliant on Gulf tanker business are facing real strain.
In short, the oil war has not opened a door for Indian insurance companies. Instead, it has exposed the limits of India’s marine insurance infrastructure, its dependence on a single state reinsurer, its limited share in global war risk markets, and its vulnerability when geopolitical shocks hit the routes that matter most.
Until GIC Re reinstates cover or alternative mechanisms emerge, Indian tankers entering the Strait of Hormuz will continue to sail into one of the world’s riskiest waters and do so largely uninsured.
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