Hong Kong marine insurers gain edge over London with cheaper war-risk cover

Hong Kong is set to challenge London’s dominance in marine insurance as Middle East tensions highlight the city’s ability to provide war-risk cover at a lower cost, according to the local insurance regulator’s chairman. Stephen Yiu Kin-wah on Tuesday said the Insurance Authority had supported insurers in launching a special war-risk insurance pool last November, which now covered 10 mainland Chinese ships sailing in the Gulf. The pool, backed by five Hong Kong insurers, offers up to US$130 million in compensation for shipowners in Hong Kong and the mainland against war and emergency risks. “The Middle East tensions in recent days have proven that the marine specialty risk pool is very much needed to provide insurance cover to shipowners,” Yiu said. “This is very important for Hong Kong to act as a marine insurance centre in the region, as it shows the city has the capacity to provide this type of cover.” Without such a pool, Chinese and Hong Kong shipowners could only turn to London for cover, Insurance Authority CEO Clement Cheung Wan-ching said, adding they would have been expected to pay more than in Hong Kong. “China owns one of the largest numbers of ships worldwide, while Hong Kong insurance companies are familiar with these Chinese companies and their business models,” Cheung said. “It is therefore Hong Kong’s role to provide marine insurance cover for these shipowners at a cheaper cost than overseas insurance markets.” Whenever ships sail into a war zone, normal cargo and marine insurance policies are usually cancelled because standard policies do not cover war damage. As a result, shipowners need to buy war insurance. In the latest case, vessels in the Gulf area had to purchase such cover. War insurance prices for ships in the Gulf area or other war zones had jumped globally since the outbreak of the war in the Middle East earlier this month, according to Ocean Chiu Wai-yeung, associate director of general business at the Insurance Authority. Hong Kong war insurance prices, however, had risen only five to 10 times since the Iran war began, compared with international rates that had soared more than tenfold, Chiu said. Cheung said marine insurance premiums in Hong Kong increased 33 per cent in the first nine months of 2025, compared with the same period in 2024. Beijing has called for an end to the war, stressing that the Strait of Hormuz and adjacent waters are vital international trade arteries. The reopening of the strait remained highly uncertain, energy intelligence provider Vortexa said in a report on Friday, adding that 35 unladen very large crude carriers – tankers capable of carrying roughly 2 million barrels each – were waiting on the eastern side of the waterway. Chief Executive John Lee Ka-chiu, in his policy address in October 2024, said the government would provide tax exemptions for ship-leasing businesses and offer tax concessions for marine insurance, shipping management, shipping agencies and ship broking. “We have seen these measures have promoted Hong Kong to develop as a risk management centre for shipping, and the trend is expected to continue in the coming years,” Cheung said, adding that Beijing, under its five-year plan, had set a goal for Hong Kong to become an international insurance and risk management centre. Hong Kong was the world’s fourth-largest ship register – after Panama, Liberia and the Marshall Islands – with 2,600 vessels totalling 130 million gross tonnes and had 82 authorised shipping insurers, according to government data.