The Strait of Hormuz has become a high-stakes affair for insurers as conflict in the region escalates. Insurance premiums for ships passing through the strait have skyrocketed, with some rates reaching as high as 10% of a vessel’s value.
Insurance Market Response
In response to the increased risk, insurance underwriters are scrutinizing prices and individual risk factors. War insurance policies were swiftly cancelled and reinstated at much higher prices following the US-Israeli strikes on February 28.
According to David Smith, head of marine at London broker McGill and Partners, the risks of transiting the strait have increased significantly. “Following a period of relative stability and recovering transit volumes, recent events in the Strait of Hormuz have once again shifted the risk landscape,” he said.
Impact on Shipping Industry
The increased insurance premiums are having a significant impact on the shipping industry. Ship owners are opting not to transit the strait due to the high costs and risks involved. However, some underwriters are offering “no-claims bonuses” to ship owners who sail through the strait without incident.
The conflict in the Strait of Hormuz is a complex issue, with multiple parties involved. The US and Iran have been engaged in a series of strikes and counter-strikes, leading to increased tensions in the region.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
