(March 5): Insurance offers are being made for vessels seeking to transit the Strait of Hormuz, the Lloyd’s Market Association (LMA) said, a sign that it is safety risks and not cover that are the main impediment blocking ships from sailing through the waterway.
The LMA comments echo remarks from broker Arthur J Gallagher & Co earlier in the day that suggest underwriters are willing to offer insurance for ships that are prepared to both enter and exit the Persian Gulf via the strait.
Governments, including the US, had been concerned that insurance availability was blocking transit but the reality is that shipowners remain wary of sending their crews into the middle of a war zone.
“We understand that offers of insurance are being made for vessels seeking to transit the Strait of Hormuz,” said Sheila Cameron, chief executive officer of the LMA, which represents underwriting firms at Lloyd’s of London, the biggest global hub for commercial and specialty risk.
“Offers will continue to be made available through the London marine war insurance market should they wish to transit at a future date when they consider it safe for their vessels and crew.”
With vessel traffic through Hormuz essentially halted, oil stockpiles are starting to back up in producer countries, choking off energy exports from across the Persian Gulf. US President Dnald Trump posted on social media this week that the US will provide insurance guarantees and naval escorts to ensure safe passage.
While insurance might help, shipowners and their crews will nevertheless still be nervous about transiting the vital waterway until hostilities cease.
See also: Oil tanker suffers explosion in northern Persian Gulf
Angus Blayney, marine divisional director at brokerage Gallagher, said cover is available for ships that plan to remain in the Persian Gulf, as well as those that are looking to enter or exit the area via the strait.
In recent days, Gallagher found marine war risk solutions for existing and new clients, Blayney said, without providing details of the insurance.
Navigation plan
See also: Qatar starts relief flights as Middle East skies remain closed
“This availability applies to both vessels which are currently in the Persian Gulf and not planning to exit the region, plus those that are looking to travel, enter or exit the area via the Strait of Hormuz,” he added.
Insurance rates have increased from “levels that owners and charterers will be used to”, Blayney said, adding that costs will vary depending on the vessel type, cargo and routing.
Brokers Marsh and Aon plc, meanwhile, are among firms holding talks with the US government as part of President Trump’s plan to help insure tankers navigating the strait.
In a separate statement on Thursday, Lloyd’s said it is engaging constructively with the US International Development Finance Corporation and stakeholders to ensure the market continues to provide “solutions that support shipowners, protect crews and sustain global trade during periods of heightened geopolitical risk”.
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