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War Risk Rates Dip as Shipowners Eye Hormuz Passage
Insurance Brokers Say US-Iran Ceasefire Drives Demand While Underwriters Remain Cautious
Shipowners are placing “huge volume requests” for insurance cover as they look to transit the Strait of Hormuz following the U.S.-Iran ceasefire deal, according to broker McGill and Partners.
With the increased demand from the market also comes “a pronounced rate correction,” said David Smith, head of marine at the London-based firm. He added that despite the ceasefire agreement, “heightened war conditions still remain, and the Strait of Hormuz is still classified as a very high-risk area.”
The Strait of Hormuz remainedon April 8, as shipowners try to understand if they can safely transit the vital waterway following a fragile ceasefire between the U.S. and Iran that was announced overnight.
That’s as continued fighting in the Middle East, punctuated by Israeli strikes in Lebanon, threatened to derail the U.S.-Iran détente even as the two sides signaled they could soon hold talks to end the six-week conflict.
“The latest news on the ceasefire is positive news and will hopefully ease the passage through the Strait of Hormuz and for ships more generally in the region,” said Andrew James, Managing Director, Marine at broker Arthur J. Gallagher & Co.
“Of course, it is very early days,” James said, but “underwriters are already recognizing the ceasefire and reducing rates for some risks.” He added that insurers “will continue to be understandably cautious as they watch how this plays out.”
