Escalating Tensions: Insurers Axe Policies and Skyrocket War Risk Premiums Amid Israel-Iran Strikes in the Strait of Hormuz
Insurers are moving to cancel maritime policies and significantly raise premiums for vessels navigating the Gulf and the Strait of Hormuz amidst escalating tensions following recent US and Israeli strikes on Iran. Brokers informed the Financial Times that war risk underwriters have begun issuing cancellation notices for ships operating in this critical oil passage ahead of the trading resumption on Monday, reflecting growing apprehension over the rapid escalation of hostilities, especially after Iran retaliated with strikes on US bases across the region.
According to Dylan Mortimer, the marine hull UK war leader at broker Marsh, insurance costs for vessels traversing the Gulf, which had been around 0.25% of a ship’s replacement value, could rise by as much as 50%. For instance, coverage for a $100 million vessel could increase from approximately $250,000 to $375,000 per voyage. Similarly, insurance rates for ships calling at Israeli ports, previously near 0.1%, are also likely to jump by up to 50% as underwriters reassess risks following Iran’s potential for retaliation.
Insurers are particularly concerned about the Strait of Hormuz, a vital chokepoint through which approximately one-fifth of global crude oil flows. Underwriters are closely monitoring the risk that Iran may attempt to disrupt shipping in light of ongoing military strikes. “If Israel and the US continue to strike Iran, it’s increasingly likely that Iran will leverage its influence by manipulating shipping in the region,” Mortimer stated. This concern is compounded by the potential for Iranian-affiliated groups to board or seize vessels operating in these waters.
In light of these developments, at least three vessels reportedly opted to avoid the Strait of Hormuz on Saturday as owners reevaluated their risks in the narrow waterway. Some ships are said to have received radio warnings that the strait was effectively closed to shipping, attributed to Iran’s Islamic Revolutionary Guard Corps, prompting even more caution among maritime operators.
Cargo war risk insurers, which provide coverage for goods transported on tankers carrying oil and grain, are also preparing to cancel policies and revise coverage terms to reflect higher rates, as brokers have indicated. This evolving situation paints a worrying picture for maritime trade through one of the world’s most economically critical regions, as both the insurance market and shipping operations brace for another round of volatility.
As tensions continue to simmer, the impact on shipping rates and maritime policies in the Gulf and the Strait of Hormuz could have broader implications for global oil markets and trade. The ongoing developments are likely to remain a focal point for insurers and maritime operators as they navigate the complexities of an unstable geopolitical landscape.
This situation underscores the delicate balance of international relations and the far-reaching consequences that military action can impose on global commerce, particularly in regions vital for energy supply. As the dynamics evolve, stakeholders must remain vigilant to the shifting risks associated with this pivotal maritime pathway.
Original Source: https://www.livemint.com/news/world/strait-of-hormuz-crisis-insurers-cancel-policies-raise-war-risk-premiums-on-ships-after-israel-strikes-on-iranreport-11772309959461.html
Category :
Tags:
Publish Date: 2026-03-01 02:28:00
