Even If Hormuz Reopens, War-Risk Insurance Is Unlikely to Fall Quickly, Insurers Say, With Mines, Trapped Ships and Renewed-Hostility Risk

A deal to reopen the Strait of Hormuz does not mean war-risk insurance prices will return to normal quickly. That is the message of an Insurance Business report published on June 15, 2026, which draws on S&P Global, Howden Re, Pen Underwriting, Wood Mackenzie and Bloomberg. The report says that a US-Iran agreement may reopen the strait, that President Trump said it could reopen by Friday, and that oil prices fell, but that marine insurers are keeping their guard up. This article summarises that report, with a note on later developments. An earlier version of this article gave war-risk premiums of 3% to 8% of vessel value as an estimate from the same report. Those figures come from a different Insurance Business article published on June 28, which cites Marsh, and the June 15 report cites S&P Global figures of about 0.1% rising to around 1%. The two sets of figures are from different dates and sources, and are explained separately here.

What do the premium figures say? According to S&P Global, cited in the June 15 report, war-risk premiums rose from about 0.1% to around 1% of vessel value as hostilities escalated. The report's lead says premiums reached as much as 30 times pre-conflict levels. In the later June 28 report, the pre-conflict rate is given as about 0.25% of hull value, with a peak as high as 10% according to Dylan Saunders-Mortimer of Marsh, and current estimates of 3% to 8%, equal to $3 million to $8 million for one large tanker transit. These differences show that war-risk pricing is negotiated vessel by vessel and changes quickly, and that sources use different baselines. Readers should treat the numbers as indicative.

How has the market behaved? Howden Re described the hull war, cargo war and political violence markets as under extreme pressure. Insurers expanded their high-risk zones and scrutinised vessel movements more closely. Many used seven-day cancellation provisions, standard in war-risk policies, to withdraw cover and reissue it at higher rates. Simmonds of Pen Underwriting defended the practice as a way to keep capacity available, saying no single insurer is overexposed because capacity is shared. In plain terms, war-risk insurers can reprice every week, which is why prices can rise suddenly and fall more slowly.

What is holding back normalisation? Bloomberg reported uncertainty about potential mines, as well as electronic interference, navigation safety and the risk of renewed hostilities. Hundreds of vessels remain stranded on either side of the strait, waiting for clarity before resuming normal operations. Simmonds noted that the strait is about 21 miles wide at its narrowest point, which concentrates risk. The report does not mention naval or other escorts, though a separate article on this site describes how Berkshire Hathaway's Ajit Jain referred to US Navy escort assurances as part of the underwriting terms for a government-backed programme.

What are the wider effects? Wood Mackenzie said the closure removed more than 80 million tonnes a year of liquefied natural gas supply, roughly 20% of worldwide supply. That is why the strait matters to energy importers far from the Gulf. Higher insurance costs are passed on in freight rates and, ultimately, in prices, although safety concerns, not only insurance, also limit transits.

How long might it take? Simmonds said the market will want evidence that the agreement is holding and vessels can transit safely before pricing normalises, adding that it is not something that happens overnight. In the June 28 report, Neeraj Gupta of Policybazaar UAE said underwriters need two to four weeks of confirmed de-escalation before lower risk feeds into pricing, and that a full return to pre-conflict rates could take several months. That article also says a ceasefire signed earlier in June was undermined by renewed hostilities on June 27. Conditions have continued to change since, and readers should check current news for the latest status.

What does it mean for businesses and consumers? Importers, exporters and shipping lines should expect that cover remains expensive and subject to short-notice cancellation. They may seek to spread costs through contracts, use government-backed facilities where available, or reroute where feasible. For consumers, the effect is indirect, through the cost of fuel and goods. Insurers' willingness to return depends on the stability of the ceasefire and the physical safety of transits.

How does war-risk cover differ from ordinary marine insurance? Standard hull and cargo policies exclude war and related perils, which are covered separately under war-risk policies that can be cancelled at short notice and repriced for each voyage or zone. That is why a ship can have its normal insurance intact but still be unable to sail into a listed area without extra cover. Shipowners, charterers and lenders usually require cover to be in place before a vessel moves, so the availability and price of war-risk insurance can decide whether a voyage happens at all.

Why does a deal not fix it immediately? Underwriters price on the likelihood of attack, mine strikes and detention, and a signed agreement reduces that likelihood only if it holds. Until there is a track record of safe transits, insurers will keep zones and cancellation rights in place. That is a rational response to uncertainty, though it is frustrating for those waiting for costs to fall.

This article summarises press reports of a fast-moving situation and is not insurance, shipping or investment advice.