Insurers rush to cancel war risk covers amid halt in Hormuz ship transits, Pg12

Key Highlights:

• Shipping lines suspended vessel movements through the Strait of Hormuz following US and Israeli strikes on Iran.
• War risk insurance firms issued cancellation notices for ships operating in the Middle East.
• Major container carriers halted or diverted vessels from the Strait of Hormuz and rerouted traffic from the Suez Canal.
• War risk premiums for ships transiting the Gulf are expected to jump by as much as 50%.
• At least 15 container ships reversed course while attempting to enter or exit the Strait of Hormuz.

Detailed Insights:

• The suspension of transits through the Strait of Hormuz highlights the escalating maritime risk in the region due to geopolitical tensions.
• Insurance costs are expected to increase significantly if the conflict continues, impacting shipping companies and global trade.
• The Mediterranean Shipping Company (MSC) suspended all bookings for worldwide cargo to the Middle East, reflecting the severity of the situation.
• CMA CGM and Hapag-Lloyd also directed ships to take shelter and halted transits, further disrupting shipping schedules.
• Although Iran has not formally declared a blockade, the actions of shipping companies have effectively paralysed a critical maritime chokepoint.

Key Concepts Involved:

• Strait of Hormuz: A narrow waterway connecting the Persian Gulf and the Gulf of Oman, crucial for global oil transportation.
• War Risk Insurance: Insurance that covers losses caused by acts of war, including damage to vessels and cargo.
• Suez Canal: An artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea, providing a direct route for shipping between Europe and Asia.