Maritime Underwriting on Edge in Hormuz

The recent escalation saw at least three vessels attacked with projectiles and drones in and near the Strait of Hormuz. Incidents involved the Palau-flagged oil tanker *Skylight*, which was set ablaze, and the Marshall Islands-flagged *MKD VYOM*, which suffered a fatality after being hit. In response, war risk insurance premiums for the Gulf have surged by as much as 50%. For a vessel valued at $100 million, this translates to a cost increase from approximately $250,000 to $375,000 for a single voyage through the volatile chokepoint. War risk underwriters took the rare step of submitting cancellation notices for existing policies covering ships in the region, signaling a rapid reassessment of risk ahead of renegotiating coverage at significantly higher rates. Marine insurance provider Skuld was among those who cancelled war risk coverage for the Mideast Gulf and the Gulf of Oman. Major container lines, including Maersk and Hapag-Lloyd, have suspended all vessel transits through the Strait of Hormuz until further notice. At one point, tracking data showed at least 15 container ships had reversed course to avoid the waterway, with hundreds of tankers dropping anchor to await clarity. This disruption is critical as the strait handles nearly a fifth of the world's daily petroleum supply and a significant portion of its liquefied natural gas (LNG). The waterway's closure, whether formal or de facto due to insurance withdrawal, poses a substantial threat to global energy markets. Adding to the complexity, vessels in the region have reported significant GPS signal degradation. This interference hampers navigation and the Automatic Identification System (AIS) used for tracking, amplifying the risk of collision or miscalculation in an already tense environment.