Donald Trump has called for US-backed insurance after many of the world’s biggest marine insurers stopped covering war risks for ships entering the Persian Gulf.
On March 5, various members of the London-based International Group of Protection and Indemnity Clubs will automatically end war risk coverage if a ship enters the Persian Gulf.
These include Gard AS, NorthStandard, Steamship Mutual Underwriting Association, Assuranceforeningen Skuld, American Steamship Owners’ Mutual Protection and Indemnity Association, the Swedish Club, and the London P&I Club.
Lloyds of London, the insurance market, is the largest supplier of war insurance, underwriting between 70% and 80% of the world’s war business.
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But many insurers are backing away because of threats surrounding shipboarding and seizure by Iranian forces, as well as risks surrounding missile and drone strikes. Before this, there were reports of attacks on ships in the Strait of Hormuz and on the coast of Oman, resulting in casualties.
Earlier this week, Dylan Mortimer, head of UK Maritime at Marsh, said: “It’s too early to say at this point, but we would estimate that near-term rate increases for marine hull insurance in the Gulf could be between 25 and 50 per cent, without a direct attack on merchant shipping, which has major insurance repercussions across the board.”
However, in a post to Truth Social on Tuesday, the US president said he ordered the Development Finance Corporation, the federal loan agency, to provide political risk insurance “at the most reasonable cost” and guarantees for “all maritime trade, especially energy,” traveling through the Gulf.
He added: “If necessary, the US Navy will soon begin transporting tankers through the Strait of Hormuz. No matter what, the United States will guarantee the free flow of energy to the world.”
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The Persian Gulf is critical to international trade as it is the primary route for more than 20 percent of the world’s oil and liquefied natural gas (LNG) consumption through the Strait of Hormuz.
The price of a barrel of oil, as measured by Brent crude oil, the international benchmark, is over $83, the highest level since July 2024.
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