London Marine Insurers Report Drop in Ship Insurance Demand Amid Hormuz Tensions
London's marine insurance market is currently experiencing a notable decline in inquiries for coverage related to transits through the Strait of Hormuz. This shift reflects a growing apprehension among shipowners amid escalating tensions between the U.S. and Iran. Following a breakdown of a recent ceasefire in the Middle East, marine war insurance brokers and underwriters reported a significant drop in requests for quotes, indicating a cautious approach from the shipping industry. As of Thursday, shipping traffic through the Strait of Hormuz has nearly come to a standstill, with very few vessels making the journey. Some shipowners who had previously navigated the waterway expressed hesitation about returning, with one even canceling plans to do so. Complicating the situation further, many vessels have been crossing the strait with their transponders turned off, obscuring the true volume of maritime activity. Despite the overall decline in requests for insurance, there remains a subset of shipowners still interested in making the journey, albeit with increased caution. The cost of marine insurance has remained elevated, with some brokers reporting a slight uptick in premiums. According to Simon Lockwood from Willis Towers Watson Plc, while the overall demand for quotes has decreased, terms are still available for those willing to navigate the strait. Marcus Baker, a leading figure at Marsh, noted that insurance rates have risen significantly, now ranging from 2% to 6% of a vessel's value, compared to a fraction of a percent before the conflict escalated. For instance, insuring a $100 million oil tanker could cost up to $6 million during transit through Hormuz. The volatile nature of the situation suggests that this uncertainty in the marine insurance market is likely to persist until a stable and lasting ceasefire is achieved, leaving shipowners and insurers alike in a state of cautious anticipation.
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