Lloyd's war-risk premiums reach 1–2%

Lloyd’s market war-risk pricing for ships using the Strait of Hormuz has risen from ordinary commercial insurance math into a direct voyage cost. Market statements and trade reporting show insurers have continued to offer cover, but at sharply higher rates after hostilities in the Middle East disrupted traffic through the waterway. The most widely cited benchmark in recent weeks has been roughly 1% to 2% of a vessel’s hull value for short-period cover, with higher quotes for ships seen as more exposed. For a modern tanker, that can mean millions of dollars for a single passage. ### What exactly is being priced at 1% to 2%? War-risk insurance is a separate layer of marine cover that responds to perils such as war, strikes, terrorism, seizure and hostile acts. In the Hormuz case, the quoted percentage is generally applied to the ship’s insured hull value for a limited period or a specific transit, rather than to the cargo. Lloyd’s List reported on March 11 that seven-day war-risk cover in the Gulf had risen about tenfold from pre-conflict levels, with “plain vanilla” vessels sometimes quoted at 1% of hull value or less and higher-risk ships facing much steeper pricing. Market reporting cited a broad spread, depending on vessel type, ownership profile, flag, routing and perceived exposure. ### Why are shipowners still buying cover if it costs that much? The Lloyd’s Market Association said on March 23 that marine war insurance for Strait of Hormuz voyages remained available and rejected reports that insurance had been cancelled outright. The association said reduced vessel traffic reflected safety concerns rather than a lack of insurance capacity. (lloydslist.com) That distinction matters for owners, charterers and banks. If a ship is financed, chartered or carrying energy cargo under contract, operators may still need to move even when insurance costs spike. The premium then becomes one more voyage expense alongside fuel, crewing, delay, security measures and any demurrage from waiting for a transit window. ### How do those percentages turn into million-dollar voyage bills? A 1% premium on a ship insured for $100 million equals $1 million. (lmalloyds.com) A 2% premium on a $250 million vessel equals $5 million. That is why market participants and social-media posts have described single-voyage war-risk bills in a range of roughly $1 million to $5 million for tankers and other high-value ships. Lloyd’s List also reported that vessels with a perceived U.S., British or Israeli nexus were being charged about three times more than others for Middle East war-risk cover, adding that the extra outlays could run to millions of dollars per trip for newer ships. For some higher-risk cases, Lloyd’s List said quotes had already reached 10% of hull value. ### If insurance is available, what is still holding traffic back? Traffic through Hormuz has also been constrained by physical risk, sanctions questions and operational uncertainty. Lloyd’s List reported in early March that tanker transits had largely halted and that a queue of ships was building outside the strait. The same reporting said industry officials had limited visibility on naval escort arrangements at that stage. (lloydslist.com) The Lloyd’s Market Association has also pointed members to U.S. sanctions guidance on payments for safe passage. An OFAC FAQ dated April 28 said payments to the Iranian government or the Islamic Revolutionary Guard Corps for safe passage through the Strait of Hormuz are not authorized for U.S. persons and create significant sanctions exposure for non-U.S. persons. ### Why does this matter beyond the insurance market? (lloydslist.com) The Strait of Hormuz is a key outlet for Gulf crude and other energy shipments, so insurance costs feed directly into freight pricing and cargo economics. Lloyd’s List reported that container carriers had already imposed war-risk surcharges on Gulf cargo in early March, including a $1,500-per-TEU surcharge by Hapag-Lloyd effective March 2. (lmalloyds.com) The next formal marker for the market is May 27, 2026. The Lloyd’s Market Association has scheduled a London briefing on sanctions and financial-crime implications for insurers covering commercial shipping through the Strait of Hormuz, with Arabella Ramage and Neil Roberts listed as speakers. (lmalloyds.com) (lloydslist.com)