Insurance providers have begun cancelling policies and hiking rates for ships in the Gulf and the Strait of Hormuz following the US-Israel military operation against Iran. 

According to brokers cited by the Financial Times (FT), war risk insurers issued cancellation notices to ship owners over the weekend.

Premiums for vessels transiting this vital oil route are expected to climb by up to 50% in response to the heightened risk after Iran’s retaliatory strikes on US installations across the Middle East.

Marsh marine hull UK war leader Dylan Mortimer told the FT that that insurance premiums for ships navigating the Gulf, previously around 0.25% of a vessel’s replacement cost, could now increase by half.

For a $100m ship, this represents a jump from $250,000 to $375,000 per journey.

Mortimer also noted that insurance for ships docking at Israeli ports may rise by a similar margin, with underwriters bracing for additional reprisals.

He said: “If Israel and US are continuing to strike Iran . . . it is more likely that Iran will start trying to leverage their control via the manipulation of shipping in the region.”

Brokers indicated that cargo war risk insurers covering goods such as oil or grain also plan to serve cancellation notices from Monday.

The expectation is not for blanket refusals but rather renegotiation of terms at higher premiums.

Some shipowners have already started rerouting ships away from the Strait of Hormuz, which carry approximately one-fifth of global oil supplies.

EOS Risk, a security advisory practice, reported that some ships had received radio messages, allegedly from Iran’s Revolutionary Guard Corps, claiming the strait was now closed to maritime traffic.