Strait of Hormuz War-Risk Insurance: Why It Keeps the Strait Closed
Updated 9 Oct 2026 · Day 223 of the closure
Insurance, not a physical blockade, is what keeps most ships out of the Strait of Hormuz. War-risk premiums are running at roughly 40 times peacetime levels, single supertanker transits have been quoted above $10 million against about $250,000 before the war, and six major P&I clubs have withdrawn cover. For most voyages the numbers simply don’t work.
War-risk costs at a glance
| Measure | Before the war | 2026 crisis |
|---|---|---|
| Additional war-risk premium (% of hull value) | ~0.25% | ~7.5–10% (late July) |
| Single VLCC transit | ~$250,000 | $10M+ quoted |
| Multiple of normal | 1x | ~40x (straits.live estimate, 5 Oct) |
| P&I clubs withdrawing Hormuz cover | 0 | 6 |
Sources: The National, Insurance Day, S&P Global / Marsh, straits.live.
How marine war-risk insurance works
- Hull war-risk cover pays for damage to the ship itself from war, mines, missiles or seizure. Standard hull policies exclude war, so it is bought separately.
- Additional premium (AP): when a ship enters a listed area, underwriters charge a one-off premium per voyage, quoted as a percentage of hull value. On a $100M+ supertanker, a few percentage points means millions of dollars per transit.
- P&I cover handles third-party liabilities: crew injury and death, pollution, wreck removal. When clubs withdraw war cover, owners face unlimited exposure.
- Notice of cancellation: war cover can typically be cancelled or repriced at short notice, often seven days, so owners can’t lock in rates.
- Crew costs: seafarer unions and flag states can declare high-risk areas where crews are owed danger pay or can refuse to sail.
The Joint War Committee listing
The Lloyd’s Market Association’s Joint War Committee (JWC) keeps the list of areas where these extra premiums apply. The Gulf, the Strait of Hormuz and waters around Oman are listed, which is why even Omani ports outside the strait, such as Sohar, have seen higher charter and insurance costs.
Why the strait stays closed even when ships get through
Around 15-25 ships a day are still crossing, mostly with AIS transponders off and often uninsured or insured outside the Western market. Mainstream tanker owners, charterers, banks and cargo buyers need standard cover to trade. Until premiums fall and P&I cover returns, they stay out, and the strait remains closed in practical terms.
What would bring rates down
- A signed US-Iran agreement. See when the strait might reopen.
- A sustained run of weeks without attacks on shipping.
- Verified mine clearance of the shipping lanes.
- A change to the JWC listed-area circular.
- P&I clubs reinstating war cover.
Even then, underwriters have said normalisation would take months, not days.
FAQ
How much does war-risk insurance cost to transit the Strait of Hormuz?
Additional war-risk premiums rose from about 0.25% of hull value before the war to roughly 7.5-10% by late July 2026, and single VLCC transits have been quoted above $10 million, compared with roughly $250,000 before the crisis.
Why does insurance keep the Strait of Hormuz closed?
Most shipowners, charterers and lenders cannot sail without hull war-risk and P&I cover. With premiums up to 40 times normal and several P&I clubs withdrawing cover, the cost and liability of a transit exceed the value of most voyages, so ships stay out even when the waterway is not physically blocked.
What is the Joint War Committee listed area?
The Lloyd’s Market Association’s Joint War Committee publishes a list of high-risk areas. When waters are listed, underwriters can charge additional premiums per voyage and require notice before entry. The Gulf, the Strait of Hormuz and waters around Oman are listed.
Will insurance rates fall if there is a ceasefire?
Not immediately. Underwriters price the risk of renewed attacks and mines, so premiums tend to lag any deal by months. Rates would ease only after a sustained period without attacks and a change in the Joint War Committee listing.