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War risk underwriters submitted cancellation notices for ships operating through the key oil chokepoint ahead of trading reopening on Monday, brokers said, as per a report.
Insurers have moved to cancel policies and sharply raise premiums for vessels travelling through the Gulf and the Strait of Hormuz following the US and Israeli attacks on Iran, according to a report.
War risk underwriters submitted cancellation notices for ships operating through the key oil chokepoint ahead of trading reopening on Monday, brokers told the Financial Times, signaling heightened concern over rapid escalation after Iran launched retaliatory strikes on US bases across the region.
Premiums could rise
Insurance costs for vessels transiting the Gulf, previously around 0.25% of a ship’s replacement value, could increase by as much as 50%, according to Dylan Mortimer, marine hull UK war leader at broker Marsh.
For a $100 million vessel, that would mean coverage rising from about $250,000 to $375,000 per voyage. Insurance rates for ships calling at Israeli ports — previously near 0.1% — could also climb by up to 50%, as underwriters assess the risk of further retaliation.
Strait of Hormuz under scrutiny
The Strait of Hormuz, through which roughly one-fifth of global crude oil flows, remains the primary concern for insurers. Underwriters are evaluating the risk that Iran could attempt to disrupt shipping in response to continued strikes.
“If Israel and US are continuing to strike Iran… it’s more likely that Iran will start trying to leverage their control via the manipulation of shipping in the region,” Mortimer told the FT.
Insurers are also factoring in the possibility of Iranian-linked groups attempting to board or seize vessels in the region.
Ships begin rerouting
Amid the uncertainty, at least three vessels reportedly turned away from the Strait of Hormuz on Saturday while owners reassessed risks in the narrow waterway.
Some ships are believed to have received radio warnings attributed to Iran’s Islamic Revolutionary Guard Corps suggesting the strait was closed to shipping, according to advisory firm EOS Risk.
Cargo war risk insurers, which cover goods transported on tankers such as oil and grain, are also preparing to cancel policies and renegotiate coverage at higher rates, brokers said as per the news outlet.
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