ALERT: Six Major P&I Clubs Cancel War-Risk Coverage for Hormuz Transit

Date: March 5, 2026 Type: EMERGENCY ALERT Severity: CRITICAL Panel: Maritime Analyst

Situation

Six major P&I clubs (Gard, Skuld, NorthStandard, London P&I, American Club, and Steamship Mutual) have cancelled war-risk coverage for vessels transiting the Strait of Hormuz, effective immediately. War-risk premiums from remaining underwriters have surged from 0.2% to 1% of hull value, pushing per-voyage insurance costs from approximately $200K to over $1M for a standard $100M vessel. Combined with freight costs that have quadrupled to over $4M per ship, the strait is now commercially unviable for insured traffic.

Impact

The withdrawal creates a de facto commercial blockade. Without P&I coverage, no vessel operator can legally transit Hormuz; crew contracts, cargo liability, and port-state requirements all depend on valid club membership. Over 200 vessels are now anchored outside the strait. Daily transits have collapsed from 138 to 2-3, cutting approximately 20M bbl/day of oil flow. VLCC day rates have hit an all-time high of $423,736. Shipowners face an impossible calculus: transit uninsured or reroute at massive cost.

What to Watch

  1. Remaining underwriters: If Lloyd’s syndicates follow the clubs and withdraw, even self-insured state tankers face port-access problems at destination.
  2. US reinsurance facility: The $20B DFC backstop announced March 6. Watch whether it actually triggers club reinstatement or remains symbolic.
  3. Freight rate trajectory: VLCC rates above $400K/day signal no commercial workaround exists; sustained levels above $500K indicate market expects multi-month closure.

Sources

  • Lloyd’s List: P&I club withdrawal notices (Mar 5)
  • Argus Media: war-risk premium data
  • IMO: vessel attack reports (10+ ships attacked, 7 crew killed)
  • Kpler: vessel anchoring and transit data