London-based insurers have launched a $1 billion war risk insurance scheme to support vessels navigating the Strait of Hormuz, as conflict in the Middle East continues to disrupt one of the world’s most vital trade corridors.
The initiative is being led by Beazley, which confirmed it would head a new “marine war consortium” operating through Lloyd’s of London to provide additional coverage for ships and cargo.
“The consortium is designed to support the maritime sector with additional war insurance capacity as it deals with a complex and evolving situation in and around the Strait of Hormuz,” the company said.
The newly introduced facility will offer protection to vessels transiting the region, helping to maintain trade flows despite rising risks.
Beazley added: “The facility ‘will be offered to vessels and their cargoes whilst transiting the Strait of Hormuz; coverage will be in line with Beazley’s risk appetite and in compliance with all global sanctions’.”
Adrian Cox said the move would play a key role in stabilising supply chains, stating it would help “in keeping global trade moving”.
The ongoing conflict has sharply increased the cost of maritime insurance, with analysts warning that premiums are rising alongside growing security threats.
Since the outbreak of hostilities on 28 February, following US and Israeli strikes on Iran, shipping activity in the strait has been severely restricted.
Iranian forces have limited passage through the route, allowing only a small number of vessels to transit.
Around 30 ships have reportedly been hit or targeted in the area, according to the UK Maritime Trade Operations Centre.
Despite the availability of insurance, industry leaders stress that safety concerns are the main reason for reduced vessel movement.
The Lloyd’s Market Association said: “Safety concerns, not insurance availability, (are) driving reduced vessel traffic.”
Shipping companies are increasingly avoiding the route to protect crews amid fears of further attacks.
The United States is also preparing to introduce its own insurance-backed initiative to encourage shipping through the strait.
Scott Bessent said in late March that a US scheme aimed at boosting Hormuz crossings would begin operating soon.