Marine insurers have incurred billions of dollars in losses from providing war-risk coverage for shipping operating amid the ongoing US-Iran conflict, despite a sharp increase in headline insurance premiums, according to International Union of Marine Insurance (IUMI) Secretary General Lars Lange.
Cargo and hull insurance premiums for transits through the Strait of Hormuz have risen by several multiples since the escalation of the Middle East conflict in late February. International Maritime Organization data indicates that 84 ships have been attacked in the region, resulting in at least 23 crew casualties.
The UN agency has called on governments to help reduce insurance costs for vessels transiting the Strait of Hormuz to support the movement of seaborne cargo amid concerns over energy supplies.
IUMI, a global trade association representing marine insurance companies, has estimated that insurers have suffered losses of approximately USD 2 billion from the crisis.
“We definitely didn’t make any surplus in this particular situation,” Lange said. “The rough estimate [of our losses] would be somewhere around two billion US dollars.”
The losses are primarily associated with marine insurers covering off-hire periods and vessel damage arising from the conflict. Lloyd’s of London has separately estimated that its members incurred USD 1.9 billion in losses from insuring the shipping crisis during the January-June period.
Despite substantially higher premiums for individual Hormuz voyages, Lange said total insurance revenue has fallen sharply because the number of vessels transiting the waterway has declined significantly. Many ship operators have avoided the region because of security concerns.
The Strait of Hormuz is a critical global energy chokepoint that handled approximately 20% of global seaborne oil and LNG flows during peacetime. Daily vessel crossings have fallen to around 20, compared with more than 130 before the conflict, according to S&P Global Commodities at Sea data.
Marine insurers have continued to offer war-risk coverage during the crisis and are expected to maintain coverage for long-term clients in the energy supply chain despite the losses, according to Lange.
Insurance premiums will continue to be determined by supply and demand in the insurance market, he said.
“Our membership is business entities, and their target is, at the end of the day, to make a surplus,” Lange said. “The insurer will do its best endeavors to come up with a fair price, and if the price is too high, a competitor would come with the market-adequate price and get the business instead.”
Government Measures
Governments have also introduced measures to support insurance coverage for shipping through the Strait of Hormuz.
The US has launched a USD 40 billion reinsurance facility through the state-owned Development Finance Corporation, working with commercial insurers including Chubb to provide coverage for Hormuz transits. Saudi Arabia is developing a marine insurance pool led by Saudi Re, combining government funding with private insurers.
In the UAE, government-owned DP World has offered cargo insurance coverage against physical losses associated with war.
Lange said governments could play a greater role in insuring the movement of essential goods during periods of conflict, potentially in co-operation with private insurers. War-risk facilities established for Black Sea shipping provide another example of such arrangements.
Following Russia’s full-scale invasion of Ukraine in 2022, Ukraine partnered with Lloyd’s and Marsh McLennan to establish the Unity insurance facility. The programme provides war-risk coverage for vessels transporting non-military cargo and aims to offer rates below prevailing market levels.
Sanctions and Insurance
Although marine insurers generally maintain political neutrality during conflicts, legal and regulatory requirements can affect which trades and counterparties they are able to cover.
“We are always outside the political landscape … We are business entities,” Lange said. “[But] we comply with sanctions, and we comply with other political requirements. So that limits us.”
European insurance companies have largely refrained from participating in Russian trades. Since 2023-2024, the EU and G7 have restricted maritime service providers from participating in Russian oil trades unless the oil is sold below specified price thresholds. Some insurers have said the requirements have increased administrative and compliance burdens.
IUMI does not oppose sanctions, according to Lange, but wants governments to provide clear and precise instructions, along with sufficient transition periods when introducing new regulations.
“But compliance with sanctions goes without saying for our membership,” he said. “That is political reality nowadays.”
