RISING geopolitical tensions are prompting some charterers to seek co-assured status under shipowners’ war-risk insurance policies, a move that could reshape long-established subrogation practices in marine insurance as conflict risks increase.

The trend reflects growing concern among charterers that insurers could seek to recover war-related losses from them through subrogation claims, particularly as shipowners and cargo interests continue operating in high-risk regions such as the Middle East.

In one recent case, an Asia-based charterer secured co-assured status under the war-risk policy of a vessel that transited the Strait of Hormuz in late June, Lloyd’s List understands.

The vessel, operating under a time charter, became trapped in the Middle East Gulf after Israel and the US entered the war with Iran. The charterer continued paying hire throughout the roughly four months the vessel was stranded, in line with its contractual obligations.

When war risk cover was arranged before the vessel’s departure, the charterer requested co-assured status to protect itself from potential subrogated recovery claims arising from a war-related incident. The shipowner and insurer eventually agreed.

The war risk cover remained in place until the vessel exited Hormuz in late June during the brief window created by the US-Iran Memorandum of Understanding.

Subrogation allows insurers that have paid a claim to “step into the shoes of the assured” and pursue a responsible third party to recover some or all of the payout, said Thilo Jahn, Shanghai-based partner at Holman Fenwick Willan specialising in shipping dispute resolution.

“It’s because you don’t want the third party to effectively get away with having caused the loss and then not been pursued,” said Jahn.

However, war underwriters generally cannot pursue subrogated recoveries against a charterer for an insured loss if that charterer is a co-assured under the policy, even where its actions or orders contributed to the loss.

Given that charterers are often paying for the additional war risk cover, they “could, and perhaps should, be insisting that they are insured as well”, said Jahn.

“Otherwise it would be quite surprising if someone then comes after them in addition to that,” he added.

Not everyone agrees.

In a separate case, an Asia-based shipowner rejected a charterer’s proposal to send a vessel through Hormuz to load cargo in the MEG after the outbreak of war with Iran. The charterer had made the voyage conditional on being named as a co-assured under the vessel’s war risk policy, according to a person with direct knowledge of the matter.

“Such requests are not the norm. In fact, they are very uncommon,” the person said.

Even with insurer approval, granting co-assured status could create complications for shipowners if a charterer later failed to co-operate, the person added.

Jonathan Jones, managing director of JLJ Maritime, said that while co-assurance may appear an attractive solution as war risks rise, the implications are more complex.

Charterers and owners are “often not very good bedfellows” because their interests do not always align, he told Lloyd’s List.

“From an insurance point of view, I would not recommend it.”

“At present, the owner and the vessel’s master have the right to refuse to go wherever the charterer has told them to go,” Jones added. “If the charterer is named on the policy, is it expecting to have any influence over the control of the vessel?”