The US-Israel war on Iran: How Wartime Perils Defined the Insurance Doctrine of Proximate Cause

The escalating US-Israel war on Iran, marked by the thunder of airstrikes across the Persian Gulf, serves as a stark, modern echo of a century-old legal landmark. In 1918, the House of Lords delivered a judgment in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd that would forever redefine the insurance industry’s approach to causation. Today, as F35 fighter jets, drones and ballistic missiles disrupt global maritime trade, the principles established in that case are more relevant than ever. At Maksure Risk Solutions, we recognize that wartime acts as a catalyst for rapid industry transformation and heightened risk complexity. In this article, we explore how our deep understanding of the doctrine of proximate cause ensures that our clients are protected across marine and all other classes of business.

The Leyland Shipping case arose during the First World War when the steamship Ikaria was torpedoed by a German submarine. Though she reached the friendly waters of the Port of Le Havre (France), she was later moved to an outer berth where she eventually sank due to the combined effects of the torpedo damage and adverse weather conditions. The central question was whether the loss was caused by a "peril of the sea" (covered) or a "war risk" (excluded). The court famously rejected the "last event" theory, ruling that the torpedo, the proximate cause, set in motion a chain of events that led inevitably to the ship's demise. This "dominant and effective cause" test remains the gold standard for determining liability.

In our own South African law, this principle was further refined in Incorporated General Insurances Ltd v Shooter t/a Shooter's Fisheries (1987). In this case, the Appellate Division of South Africa examined a claim for the loss of the trawler Morning Star, confiscated by Mozambican authorities after the owner failed to pay a fine for illegal fishing. While the initial detention was an insured peril under a war-risk policy, the court determined that the proximate cause of the loss was the uninsured failure to pay the fine, leading to confiscation. Consequently, the insurer was absolved of liability, establishing a crucial precedent in South African insurance law that liability hinges on the efficient cause of loss, not merely an earlier covered event.

It is from such legal tests that it has become entrenched that, where there are two or more possible causes, the court must identify the causa causans (the real or effective cause), namely the proximate or actual cause of the loss. Even if the loss follows a chain of events, the insured peril remains the causa proxima (the nearest or dominant cause) so long as there is no novus actus interveniens (a new intervening act) breaking the chain of causation.

The current conflict involving Israel, the US, and Iran highlights the critical importance of this doctrine. As maritime insurers cancel war risk cover in the Gulf, the distinction between "war risks," "strikes and riots," and "ordinary operational losses" becomes a multi-billion rand debate. Our mastery of insurance principles and industry-deep case law allows us to provide clarity when the lines between covered and excluded perils blur.

Whether it is a property claim triggered by war or a complex supply chain interruption caused by terrorism, the doctrine of proximate cause is the lens through which we ensure fair and accurate claims payments. In a world where geopolitical and economic landscapes can change overnight, Maksure Risk Solutions stands as a beacon of stability, leveraging centuries of legal wisdom to protect your future across every class of insurance.

About Maksure Risk Solutions

Maksure Risk Solutions is an Afro-Global independent specialist insurance and reinsurance broker with business footprint in Africa, Asia, East & Western Europe, South America and the Caribbean. We provide innovative and tailor-made risk solutions in Insurance and Reinsurance as well as Risk Financing and Actuarial Consulting geared towards capital management and strengthening our client’s balance sheet. Maksure is also one of the major players in Captive Management (Establishment & Management) in South Africa, Mauritius, Bermuda and various other jurisdictions. We have access into the Lloyds of London with a deep understanding of African markets. Our global nature ensures that our clients access quality capacity as well as some of the world’s latest thinking and solutions.