Quills and Conflict: Marine Insurance in the Strait of Hormuz

Quills and conflict remain intertwined at Lloyd’s of London, where centuries-old traditions meet modern geopolitical turbulence. Inside the institution’s central London headquarters, leather-bound volumes record maritime disasters dating back 250 years. One famous entry documents the Titanic’s sinking in April 1912, with coverage valued at £1 million—roughly £101.6 million today. For over three centuries, these “waiters” have documented losses using traditional quill pens, establishing Lloyd’s as the global cornerstone of marine insurance. Now, Quills and conflict have converged once again as Middle Eastern tensions reshape maritime risk.

War Coverage Prices Surge After Hormuz Restrictions

When Tehran restricted the Strait of Hormuz following coordinated American and Israeli military operations on February 28, Lloyd’s underwriters responded with unprecedented speed. Overnight, the financial implications of transiting this critical waterway escalated dramatically. War-related coverage policies underwent rapid cancellation and subsequent reinstatement at substantially elevated rates. Marcus Baker, Marsh’s global marine and cargo executive, reported that shipping rates climbed to an astonishing 10 percent of a vessel’s total worth—compared to the previous range of 0.25 to 0.5 percent. For a tanker valued at $100 million, such a crossing could cost $10 million alone.

Following a period of relative stability and recovering transit volumes, recent events in the Strait of Hormuz have once again shifted the risk landscape.

Hull war coverage, which protects a ship’s physical framework against conflict-related damage or complete loss, has gradually decreased to between 1 and 3 percent of a vessel’s assessed value. Additionally, Baker mentioned that certain underwriters now provide “no-claims bonuses,” refunding fifty percent of the premium to ship operators whose vessels complete their journey without incident. David Smith, who leads the marine division at London-based McGill and Partners, explained that underwriters are carefully examining both pricing structures and individual risk elements as Middle Eastern hostilities intensify.

Urgent Coverage Decisions in Real Time

The Hormuz situation presents considerable challenges for insurance providers. Smith emphasized that war insurance costs will mirror geopolitical developments nearly on an hourly basis. Underwriters covering ships planning to cross Hormuz now prefer to set policy prices just six hours before departure, rather than the conventional twenty-four to forty-eight hour window. Once established, these policies remain effective for only three to seven days before requiring renewal discussions.

It took myself and three brokers… screaming at underwriters on the phone.

Smith recounted a particularly intense morning when a ship owner contacted him seeking same-day coverage for a potential strait crossing, following instructions from the US Navy. After Smith provided a quote and waited, the owner called back that afternoon to confirm the journey and activate what is known as “bind cover.” The urgency stemmed from the fact that the vessel was scheduled to enter the strait within merely six minutes of that phone call. Within ten minutes, the insurance certificate reached the ship’s command deck. Crew members demanded to review the policy personally, wanting assurance that their families would receive proper compensation if disaster struck during the dangerous passage.

Although that particular ship navigated safely through the waters, numerous other vessels have experienced worse fates. The International Maritime Organization confirms that at least fourteen seafarers have lost their lives since hostilities commenced. So far, this year’s Loss Book contains no entries for ships completely destroyed in the Persian Gulf conflict. Nevertheless, Neil Roberts, who heads marine and aviation operations at the Lloyd’s Market Association, reported that more than fifty ships have faced attacks in the waterway since the conflict began, with many carrying London-market insurance.

While coverage remains accessible throughout the ongoing crisis, most vessel operators have chosen to avoid the strait due to persistent attack threats. Lloyd’s does not anticipate catastrophic financial losses for insurers given their regional exposure levels. However, significant dangers persist, including underwater mines, continuing American-Iranian military exchanges, and challenges posed by newly established and occasionally restricted navigation corridors. Allianz recently stated that approximately 1,150 cargo vessels carrying insurance through the region face ongoing uncertainty as Quills and conflict continue to define maritime commerce.