As ships continue to be struck in the Strait of Hormuz amid war among the United States, Israel and Iran, Korean Reinsurance Company is moving to sign up non-life insurers that sell marine insurance for war insurance. Typically, reinsurance products related to ships do not fully cover losses from incidents caused by military conflict, requiring re-enrollment in more expensive war-related products.
According to the insurance industry on the 24th, there have been about 30 cases so far in which shipping companies re-enrolled in domestic non-life insurers' marine insurance with war damage compensation terms included. Korean Reinsurance Company is understood to have taken more than 27 of those cases. As a rule, non-life insurers review the global reinsurance market and choose suitable products. Leading corporations in the global reinsurance market include Switzerland's Swiss Re and Germany's Munich Re. To win war insurance sign-ups this time, Korean Reinsurance Company is said to have offered non-life insurers a lower commission rate than competitors.
Reinsurance refers to transferring all or part of the liabilities under an insurance contract to another insurer. Typically, insurers enroll in reinsurance to prepare for situations where a major accident occurs and they must pay large insurance claims.
Risks within the Strait of Hormuz have been rising since the U.S. airstrike on Iran. The Strait of Hormuz sees so many ships pass that 20% of the world's crude oil shipments go through it, and the areas deep enough for very large crude carriers lie only within Iran's waters. Iran, attacked by the United States and Israel, is striking ships transiting the Strait of Hormuz. Some domestic vessels are also said to be operating in the Strait of Hormuz at present.
Generally, marine insurance includes a special clause that covers wartime situations. However, when the likelihood of actual military conflict is high, the insurer gives the shipping company a 72-hour grace period and then requires enrollment in a war special clause product with a higher premium. If they do not enroll, losses due to war are not covered. Premiums for ships passing through the Strait of Hormuz are reported to have surged to more than 12 times pre-war levels.
Korean Reinsurance Company, the only domestic reinsurer, controlled most of the Korean reinsurance market in the early 2000s, but its market share is now estimated to have fallen to around 50% due to the entry of overseas reinsurers. In response, Korean Reinsurance Company is actively competing to win domestic non-life insurers. A Korean Reinsurance Company official said, "We are reasonably calculating premiums through risk analysis within the Strait of Hormuz."