As of May 7, the insurance costs for commercial vessels operating in the Arabian Sea remain stable, despite rising tensions between India and Pakistan. Maritime executives and navy officials have indicated that no additional war risk premiums have been imposed on ships traveling to and from the Indian subcontinent during this period of increased discord.
While there has been a nominal Additional War Risk Premium (AWRP) in place for several years, most insurance companies have opted not to raise these rates following the escalation of tensions. Sri Lanka’s navy chief, Vice Admiral Kanchana Banagoda, confirmed the safety of commercial shipping lanes in the Indian Ocean and the Arabian Sea, stating that all transits continue as normal.
He emphasized the importance of diplomatic dialogue between India and Pakistan to maintain regional stability, noting the friendship both nations share with Sri Lanka. India plays a crucial role in the maritime trade of crude oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG), being a leading importer and one of the world’s largest exporters of refined oil products.
Currently, the nominal AWRP charge equates to about $40,000-$50,000 for older crude carriers making a seven-day transit through the Arabian Sea. According to an Oslo-based insurance executive, there have been no immediate increases in war risk insurance costs.
However, should the situation between India and Pakistan deteriorate further, shipping operators expect that insurance premiums could rise, prompting vessels to reroute. Discussions at the IMDEX conference revealed that ships would likely steer clear of conflict zones by avoiding proximity to Indian waters, instead choosing alternative paths.
In remarks made during the ASEAN-India naval exercise, an Indian Navy official reiterated India’s stance of not escalating tensions. Concerns remain, as rising AWRP rates already burden charterers operating in high-risk areas like the Red Sea and Persian Gulf, further complicating global shipping logistics amid ongoing geopolitical issues.