After the US and Israeli attacks on Iran, insurance companies canceled policies and sharply increased premiums for vessels sailing through the Persian Gulf and Strait of Hormuz, according to the report.
War risk underwriters have submitted cancellation notices for ships operating through the key oil choke point ahead of the reopening of trading on Monday, brokers told the Financial Times, signaling heightened fears of a rapid escalation after Iran launched retaliatory attacks on US bases across the region.
Premiums could increase
Insurance costs for vessels sailing through the Gulf, previously around 0.25% of the ship’s replacement value, could rise by as much as 50%, according to Dylan Mortimer, UK naval hull war leader at broker Marsh.
For a $100 million vessel, this would increase coverage from approximately $250,000 to $375,000 per voyage. Insurance rates for ships calling at Israeli ports – previously close to 0.1% – could also climb as much as 50% as underwriters assess the risk of further retaliation.
Strait of Hormuz under the microscope
The Strait of Hormuz, through which roughly a fifth of the world’s oil flows, remains a major concern for insurers. The underwriters are assessing the risk that Iran could try to cut off shipping in response to continued strikes.
“If Israel and the US continue to attack Iran… it is more likely that Iran will begin to try to gain control through the manipulation of shipping in the region,” Mortimer told the FT.
Insurers also anticipate the possibility that Iran-linked groups will attempt to board or seize vessels in the region.
Ships begin to divert
Amid the uncertainty, at least three vessels reportedly turned away from the Strait of Hormuz on Saturday as owners reassessed the risks in the narrow waterway.
Some ships are believed to have received radio warnings attributed to Iran’s Islamic Revolutionary Guard Corps indicating the strait was closed to shipping, according to consultancy EOS Risk.
War cargo insurers, which cover tanker goods such as oil and grain, are also preparing to cancel policies and renegotiate coverage at higher rates, brokers said, according to news reports.
