Trump demands US-backed insurance as firms suspend cover in Persian Gulf
Donald Trump calls for a US-backed insurance following news that most of the world’s largest maritime insurance firms are set to cease covering war risks for ships entering the Persian Gulf.
On 5 March, various members of the London-based International Group of Protection and Indemnity Clubs will automatically terminate war-risk cover if vessels enter the Persian Gulf.
Those 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.
Lloyd’s of London, the insurance marketplace, is the largest supplier of war insurance, writing between 70 per cent and 80 per cent of the world’s war business.
But many insurers are pulling back due to risks around threats of vessel boarding and seizure by Iranian forces, as well as missile and drone strikes. There are already reports of vessels being attacked in the Strait of Hormuz and off Oman, resulting in damage and loss of life.
Strait of Hormuz crucial for natural gas and oil trade
Earlier this week, Dylan Mortimer, marine hull UK war leader at Marsh said: “It is very early to tell at this point, but we would estimate that near-term rate increases for marine hull insurance in the Gulf could range from 25 to 50 per cent, barring any direct attack on merchant shipping, which could have major repercussions across war insurance rates.”
However, in a post to Truth Social on Tuesday, the US President said he has ordered the Development Finance Corporation, a federal loan agency, to provide “at a very reasonable price” political risk insurance and guarantees for “ALL Maritime Trade, especially energy”, travelling through the Gulf.
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD,” he added.
The Persian Gulf is critically important for global trade as it is the primary route for over 20 per cent of the world’s total oil and liquefied natural gas (LNG) consumption through the Strait of Hormuz.
The cost of a barrel of oil, as measured by Brent crude, the international benchmark, stands at over $83, its highest level since July 2024.