War and terrorism cover is rocketing for ships calling to Iraqi ports following Saturday's suicide boat attack on Basra oil terminal.

Atrium active underwriter Christine Dandridge said: "We are looking at the situation day-by-day as it develops. We want to know where the attacks are coming from."

Dandridge said that Atrium rates in the North of the Persian Gulf had increased by 50%. "Other underwriters have doubled theirs," she added.

Another senior underwriter said that the market was starting to see "knee-jerk reactions" to the situation, probably under pressure from corporate capital.

"In the past the market has been less quick to move."