London-based reinsurers are issuing seven-day cancellation notices on marine war-risk coverage after a US submarine torpedoed an Iranian warship off Sri Lanka, amplifying risk perception, according to people familiar with the matter. The attack, the first American submarine strike on a surface vessel since World War II, has triggered a surge in risk premiums for hull and related marine coverage.

The US submarine attack in international waters has further escalated concerns about the widening geographic impact of Middle East conflicts. Shipping lines can seek to reinstate coverage through buybacks once policies lapse, but the cost has surged beyond typical wartime adjustments. Rates that usually climb up to 50% in wartime have instead tripled in some cases — rising to $750,000 per vessel from $250,000.

If hostilities persist for another 10 days, buyback options may no longer be available, the people said. Marine insurers were assessing their exposures and reacting according to the provisions of their contracts which could include giving notice of cancellation. The worsening situation in the Persian Gulf remains the primary concern, said Hitesh Joshi, executive director at GIC Re. Cargo insurance has also been affected, with war-risk cover for cargo jumping from about 0.03% of cargo value to around 1% in affected zones.