The ongoing conflict in the Middle East is having a profound impact on global shipping. This, in turn, is affecting the world economy and the insurance market. Marine insurance premiums in the region are rising sharply, as are reinsurance costs. In some high-risk areas, securing new marine coverage is becoming very difficult or impossible. Stefan Bessman comments on the current situation.
While the situation may feel unprecedented, it is not new even for historically peaceful Sweden. Coverage for war-related risks, as well as exclusions tied to such risks, has long been part of insurance practice. In Sweden, these frameworks evolved significantly in response to the World Wars, when shipping, including Swedish vessels, was severely impacted by submarine warfare and naval mines.
A notable example is the Swedish Supreme Court case NJA 1919 p. 111, which concerned a cargo vessel departing from a Swedish port. The voyage was aborted due to the high risk of submarine attacks in the Baltic Sea, following the declaration of unrestricted submarine warfare. Despite the absence of a direct attack, the resulting loss was deemed sufficiently proximate to fall within the scope of the insurance policy.
Today, the act (1999:890) provides the Government with far-reaching powers to intervene in and modify existing insurance contracts during war or when an imminent risk of war is at hand. The Government can take such measures on a temporary basis without requiring parliamentary approval.
