As the conflict in the Gulf widens, maritime insurance premiums for war coverage are surging -- in some cases by more than 1000% -- dramatically driving up the cost of moving energy
As the conflict in the Gulf widens, maritime insurance premiums for war coverage are surging -- in some cases by more than 1000% -- dramatically driving up the cost of moving energy through a critical maritime corridor.
The conflagration sparked by Saturday's Israeli-U.S. air strikes against Tehran has paralyzed traffic through the Strait of Hormuz, a major shipping chokepoint. Iran on Monday said it would fire on any ship trying to pass, and at least nine vessels have suffered damage in the area since the conflict began.
War risk insurance allows ship owners to claim against any damage to their vessel or the cargo resulting from conflict or terrorism. Policies are typically annual, although some cover one-off voyages through risky waters, including war zones.
The spike in premiums underscores how the war is raising costs for ship owners, traders and energy companies moving cargo through the Strait, adding to fears the conflict -- which shows no signs of abating -- could stoke inflation if it goes on, said analysts.
"The hull war market has reacted more immediately," due to the risk of large, concentrated losses if multiple vessels are hit in the same area, said Stephen Rudman, head of marine,
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