The insurance response to the blockage of the Strait of Hormuz in the ongoing hostilities in the Middle East has moved beyond incremental pricing, according to a brief by Dubai-based law firm Fichte & Co (Fichte).
Following tanker attacks and the Islamic Revolutionary Guard Corps’ (IRGC) declaration that the Strait of Hormuz was “closed”, major P&I Clubs (including Gard, major P&I Clubs (including Gard, Skuld, NorthStandard, the London P&I Club and the American Club) issued cancellation notices for war risk cover for non-mutual (fixed premium) entries stated to take effect from 5 March 2026, forcing owners to seek replacement terms in a rapidly tightening market.
In parallel, brokers report that underwritersare not only repricing but, in some cases, declining to quote for Hormuz transits, with war-risk premiums reportedly jumping to as high as 1% of hull value within 48 hours (from around 0.2% the prior week), illustratively pushing the per-voyage war premium for a $100m tanker from roughly $200,000 to about $1m.
“This dynamic creates a de facto closure risk even without a formal blockade: if ships cannot secure affordable war cover (or any cover at all), charterers, ports, banks and regulators effectively treat the voyage as non-performable, driving immediate knock-on increases in freight and delivered energy costs” according to Ms Jasmin Fichte, the firm’s Managing Partner and Ms Anna Mkrtchyan, Legal Director, who are joint authors of the brief.
Live contractual risk allocation exercise
The authors say that stakeholders should treat Hormuz as a live contractual risk allocation exercise, not merely a security briefing. The brief highlights:
- Charterparty hygiene (immediate): confirm the exact war risks wording (including “blockade/closure” language), notice requirements, and who decides route safety (owners/master vs charterers). Confirm whether additional premiums are for the charterers’ account and what evidence is required.
- Sanctions and trade compliance: screen cargo, counterparties, and voyage orders; ensure deviation decisions do not create separate sanctions breaches.
- Operational protocols: align with requirements of undewriters who increasingly base price on demonstrated risk controls.
- Claims and disputes readiness: preserve evidence early (war-risk quotes/declinations, navigational warnings, port agent correspondence, Automatic Identification System (AIS) tracks, voyage instructions, logs).
- Drafting upgrades (next fixtures/renewals): expressly include “strait closure/denial of access/loss of insurability/insurer refusal” in force majeure and war risks frameworks; hardwire cost allocation for additional premiums and re-routing.