The Daily View: Marine insurers don’t need a new forever war

IT COMES to something when a marine war risk underwriter closes an email by wishing for peace in 2026. After all, the clue to the source of the profession’s livelihood is in the job title.

But that’s what one of my contacts did today after I asked him about market responses to last weekend’s dramatic events in Caracas.

Operation Absolute Resolve saw American special forces swoop on the safe house in which Venezuelan President Nicolás Maduro was staying and abduct him to New York, where he appeared in court on Monday on charges of narco-terrorism conspiracy.

While the country is undoubtedly a transhipment point for smugglers, the majority of the cocaine flooding the US originates in Colombia and most of the fentanyl is made in Mexico.

This has led to widespread belief the action was motivated more by the desire to take hold of the world’s largest proven reserves of crude oil than genuine concern at the rising tide of drug deaths north of the Rio Grande.

Trump has openly proclaimed his plans to invite US interests to improve the dilapidated local oil industry. Reports suggest that the oil majors are wary of the prospect, but that there is substantial interest further down the food chain, especially from private equity.

In the meantime, Washington has imposed what it describes as a “quarantine” on Venezuelan oil exports, presumably in a bid to ensure that acting president Delcy Rodríguez toes the White House line.

That could mean opportunities for tanker owners to lift American-approved stems. But it will also require a willingness from marine insurers to write the business at an acceptable cost.

Many Venezuelans are not entirely unhappy with Maduro’s ousting. He was, after all, an authoritarian leader who has presided over plunging living standards and who blatantly rigged the 2024 presidential elections.

Even so, history suggests that a substantial segment of the population will not welcome the intervention. Underwriters fear the real prospect of armed resistance to US plans, which could include acts of sabotage directed against vessels. That could prove protracted, bloody and bitter.

The inexorable train of events may yet entail boots on the ground, an outcome for which Trump says he is prepared. Success is scarcely guaranteed; hundreds of thousands of troops were deployed to Vietnam, Afghanistan and Iraq, only to result in failure in all three instances.

As I report today, marine war risk rates for Venezuela calls have yet to settle, as underwriters back behind their desks after the festive season reach their assessment on what happens next.

The country was already a listed area even before the Maduro abduction, allowing underwriters to charge additional premiums from shipowners planning to call in the country.

These are levied as a fraction of hull value, and for shipowners, represent an unwanted levy running to tens of thousands of dollars, and perhaps hundreds of thousands of dollars, per trip. That said, they are usually added to the charterer’s account.

There are no signs of immediate panic on underwriters’ part and even an air of business as usual for the time being. But heightened risk perceptions will inevitably mean increased additional premiums in the coming period.

As Frédéric Denèfle, managing director of continental Europe’s largest marine risk consortium, put it: “Of course rates will be high.”

But the underwriter I mentioned in my opening paragraphs certainly has a point. The world has enough forever wars already without a new one starting in Latin America.

David Osler
Law and insurance editor, Lloyd’s List

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