ABSTRACT
The maritime corridors connecting the Red Sea and the Black Sea have emerged as critical geopolitical flashpoints, driven by escalating conflicts, piracy, and regional power rivalries. These developments have significantly altered the risk landscape for international shipping and trade. This paper examines the current state of war risk insurance in these volatile regions, highlighting how underwriters assess and price geopolitical threats such as armed conflict, terrorism, and state-sponsored disruptions. It also explores the legal, economic, and operational implications for shipping companies and insurers operating in or near these high-risk zones. Special attention is given to the impacts of conflicts such as the Russia-Ukraine war and instability around the Bab el-Mandeb strait, as well as the evolving role of regulatory frameworks and international cooperation. The study aims to provide a comprehensive understanding of how war risk insurance is adapting to a rapidly changing security environment from the Red Sea to the Black Sea.
Keywords:War risk insurance, Red Sea, Black Sea, geopolitical risk, maritime security, piracy, shipping insurance .
INTRODUCTION: THE STRATEGIC MARITIME CORRIDORS AT RISK In an era marked by increasing geopolitical tensions, two maritime regionsthe Red Sea and the Black Sea have emerged as critical flashpoints with profound implications for global trade, maritime security, and insurance markets. These waterways are not only vital arteries for the movement of goods, particularly energy commodities, but they also sit at the intersection of rival military powers and unstable political regimes.
The Red Sea, bordered by countries such as Egypt, Sudan, Eritrea, and Yemen, serves as the southern gateway to the Suez Canal, one of the world’s most important maritime chokepoints. Disruption in this corridor can have immediate and widespread effects on global shipping routes, as evidenced by the Ever Given incident in 2021, which blocked the Suez Canal and halted nearly 12% of global trade for six days.[1] At the southern tip of the Red Sea, the Bab el-Mandeb Strait narrows to just 18 miles, making it a strategic bottleneck that is vulnerable to piracy, terrorism, and state-sponsored aggression.[2]
Meanwhile, the Black Seabordered by Russia, Ukraine, Turkey, and several NATO-adjacent stateshas been thrust into the geopolitical spotlight following Russia’s annexation of Crimea in 2014 and its full-scale invasion of Ukraine in 2022.[3] The war has not only caused direct attacks on merchant vessels but also triggered an overhaul of war risk insurance premiums, rerouting of cargo, and increased reliance on force majeure clauses. The region has become a contested maritime domain, where freedom of navigation is increasingly undermined by military escalation and economic sanctions.
Together, these maritime corridors are increasingly perceived as “choke points of risk”, requiring constant risk evaluation by shippers, insurers, and governments alike. War risk insurance markets have responded by redefining risk zones, increasing premiums, and reevaluating coverage terms to account for the fluid nature of modern hybrid conflicts in these areas.
[1]Int’l Chamber of Shipping, Suez Canal Blockage: Global Shipping Holds Its Breath, ICS (Mar. 2021), https://www.ics-shipping.org.
[2] U.N. Sec. Council, Letter Dated 13 November 2020 from the Panel of Experts on Yemen Addressed to the President of the Security Council, U.N. Doc. S/2020/1176 (Nov. 13, 2020).
[3]U.N. General Assembly, Resolution on the Territorial Integrity of Ukraine, G.A. Res. 68/262, U.N. Doc. A/RES/68/262 (Apr. 1, 2014).