Israeli Insurers Cancel Black Sea War Risk Cover Amid Escalating Threats
Phoenix and Harel have canceled war risk insurance for Black Sea cargo shipments, threatening higher transport costs and potential consumer price increases for food staples amid ongoing maritime security concerns.
Phoenix Holdings and Harel Insurance have announced the cancellation of war risk and strike cover for cargo shipments in the Black Sea region, citing escalating security threats against commercial vessels and maritime infrastructure. Together, the two companies hold roughly 50% of the Israeli marine cargo insurance market.
The cancellation by Phoenix takes effect tonight, while Harel's policy changes will be implemented tomorrow. Importers and exporters whose supply chains run through the area will now need to seek alternative coverage, which is expected to drive up transport costs. Industry experts warn that these rising expenses could eventually reach consumers through higher food prices.
The insurers' decision follows an update from the Joint War Committee (JWC) of the London insurance market, which significantly expanded its list of high-risk war zones. Nearly the entire Black Sea basin is now included, excluding territorial waters of Turkey, Bulgaria, Romania, and Georgia, while Russian and Ukrainian waters and the Sea of Azov are fully designated as high-risk.
Impact on Trade and Supply Chains
Phoenix emphasized that the cancellation applies solely to war and strike risks, with all other policy coverages remaining active. The company will evaluate requests for specialized coverage on a case-by-case basis, subject to prior approval, special terms, and additional premiums. Other major insurers in Israel, including Clal Insurance and Menora Mivtachim, noted that their policies already include broad exclusions related to war and the Russia-Ukraine conflict, requiring no immediate changes.
Ayelet Dan, chair of the Marine Insurance Committee at the Israeli Insurance Agents Association, expressed deep concern over the shrinking private coverage and ongoing uncertainty surrounding the state-backed safety net. The Ministry of Finance operates a supplementary insurance program for importers and exporters, but current approvals are set to expire at the end of November unless extended.
Potential Effect on Consumer Prices
Elad Barshan, a customs and international shipping expert at Moran Cargo, warned that additional shipping and financing costs could trickle down to everyday goods, particularly raw materials used in the food industry. While shortages are not anticipated immediately, the added financial pressure threatens to push up prices for basic staples such as bread, pasta, and meat.
