Marine insurers and the London market have reacted to the pledge by US president Domald Trump that he can get maritime  trade transiting through the vital Strait of Hormuz.

Writing on Truth Social he pledged that the US would provide insurance cover “at a very reasonable price… for the Financial Security of ALL Maritime Trade, especially energy, traveling through the Gulf”.

He also suggested that naval escorts could be used to provide safe passage for tankers in the Persian Gulf, the route to market for 20% of the world’s oil supply.

Sheila Cameron CEO of the Lloyd’s Market Association gave the pledge a cautious welcome but added that the London market remain willing to offer cover if the situation was deemed to be an acceptable risk.

She said: “The Lloyd’s Market Association welcomes the engagement of President Trump and the US Development Finance Corporation to support the movement of non-sanctioned vessels and their commodities through the Strait of Hormuz in order to facilitate global trade and economic stability.

“Since Sunday 1 March, there have been at least 40 transits of vessels through the Straits of Hormuz.  There remain approximately 1,000 vessels (approximately half of which are oil and gas tankers) with an aggregate hull value exceeding $25bn in the Persian / Arabian Gulf and surrounding waters.  Most ships remain anchored in the Persian / Arabian Gulf, primarily due to the understandable concerns of the shipowners and ship masters for the safety of their vessels and crew.”

Cameron added: “Additionally, there is uncertainty with regards to availability of salvage services and contractual positions between charterers, owners and cargo in what is a rapidly evolving situation.  It is important to note that the vast majority of these vessels are insured in the London market and for those vessels, insurance currently remains in place.

“We understand that offers of insurance are being made for vessels seeking to transit the Strait of Hormuz and offers will continue to be made available through the London marine war insurance market should they wish to transit at a future date when they consider it safe for their vessels and crew.

“The London market is the home of insurance innovation:  in 2023, we collaborated to set up the Ukraine grain corridor for trapped vessels in the Black Sea, providing affordable war risk insurance to shipowners.  We look forward to collaborating with the relevant parties, including the US Development Finance Corporation, to continue supporting shipowners and to facilitate global trade and economic stability.”

Chief executive of the International Underwriting Association, Chris Jones (above pic) said insurers continued to respond to demands from maritime and aviation clients.

“Insurers have well-established risk management processes and policy protections to manage war risks and ensure that trade can continue to flow,” he explained. “The International Underwriting Association and Lloyd’s Market Association jointly engage security expert consultants to provide independent advice about areas of enhanced risk. This gives underwriters the information they need to respond appropriately.

“Iran and the Persian Gulf is, of course, currently an area of maximum risk severity, but insurance is still available to operators in the area, including the Straits of Hormuz.

“The aviation industry also has robust protocols in place to ensure the safety of passengers and insurers are working with brokers and airlines to support flights into and out of affected regions when it safe to do so.”

The International Union of Marine Insurance (IUMI) issued a statement in the situation in which it said the situation remained fast moving and fluid and there remained cover options if and when nation states agreed the transit was safe.

“IUMI and the marine insurance community are closely monitoring the situation in the Middle East and, in particular, the safety and free passage of shipping in the Persian Gulf and Red Sea. As with all shipping interests, the safety of seafarers will be a priority for owners,” it said. “The situation remains fluid with a number of vessels being trapped in the Persian Gulf and many operators re-routing their vessels to avoid the high-risk areas. Insurers will be mindful of the impact this might have on accumulations at nearby ports as well as on the vessels and crews as they navigate longer sea routes. We are likely to see disruptions to supply chains in the short-term, as a result.

“The granting of war cover for the Persian Gulf and Red Sea is and will remain available under specific agreement on a single voyage basis as long as navigation is authorised by governments and flag states. In the current fast-paced situation, insurers will regularly re-examine their ability and willingness to that provide cover.”

IUMI explained: “By way of explanation – in circumstances such as these, some insurers will serve a Notice of Cancellation in relation to the cover their assureds have in place. This is to enable the insurer to reassess the risk and then reinstate the cover at adjusted terms. It is important to recognise that a Notice of Cancellation does not, necessarily, end the cover. War cover remains available for owners and operators wishing to take it.

“It should be noted that IUMI members (in the main) provide property insurance (hull, machinery and cargo) whereas liability insurance is usually covered by Protection & Indemnity Clubs, many of whom operate under the umbrella of the International Group of P&I Clubs.”

The International Union of Marine Insurance (IUMI) issued a statement in the situation in which it said the situation remained fast moving and fluid and there remained cover options if and when nation states agreed the transit was safe.