(April 9): Shipowners are placing “huge volume requests” for insurance cover as they look to transit the Strait of Hormuz following the US-Iran ceasefire deal, according to broker McGill and Partners.
With the increased demand from the market also comes “a pronounced rate correction,” said David Smith, head of marine at the London-based firm. He added that despite the ceasefire agreement, “heightened war conditions still remain and the Strait of Hormuz is still classified as a very high risk area.”
The Strait of Hormuz remained largely blocked on Wednesday, as shipowners try to understand if they can safely transit the vital waterway following a fragile ceasefire between the US and Iran that was announced overnight.
That’s as continued fighting in the Middle East, punctuated by Israeli strikes in Lebanon, threatened to derail the US-Iran détente even as the two sides signalled they could soon hold talks to end the six-week conflict.
“The latest news on the ceasefire is positive news and will hopefully ease the passage through the Strait of Hormuz and for ships more generally in the region,” said Andrew James, the managing director of marine at broker Arthur J Gallagher & Co.
“Of course, it is very early days,” James said, but “underwriters are already recognising the ceasefire and reducing rates for some risks.” He added that insurers “will continue to be understandably cautious as they watch how this plays out.”
See also: Berkshire Hathaway to stake US$1.8 bil in insurer Tokio Marine
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