War-risk insurance, explained.

What war-risk insurance actually covers.

Marine insurance for a commercial voyage typically splits into two layers. The base layer (Hull & Machinery, plus Protection & Indemnity) covers ordinary perils: collision, grounding, weather damage, crew claims. War risks are excluded from the base layer and bought separately under a war-risk policy that responds to acts of war, civil war, insurrection, terrorism, capture, seizure, arrest, restraint, detainment, mines, torpedoes, and the destruction of the vessel by an act of state.

The market for marine war-risk cover concentrates at Lloyd’s of London. Lloyd’s underwriters write the bulk of global tanker war-risk premium, and they price that premium against a list of geographic areas where the risk is judged to exceed normal trading conditions. That list is maintained by the Joint War Committee, informally JWC.

How the listed area mechanism works.

The JWC is a panel of underwriters from the Lloyd’s and company markets that meets regularly to designate areas where the threat to commercial vessels has materially increased. When an area is added to the list, hull war-risk policies that touch that area trigger a notification clause: the underwriter has to be told seven days before the vessel enters, and the underwriter is entitled to quote a fresh premium for the specific exposure rather than relying on the annual cover.

That additional premium (the “additional war premium” or AP) is quoted as a percentage of the insured vessel value, applied to the value at risk for the duration the vessel is in the listed area. For a Very Large Crude Carrier worth roughly $80 to $120 million carrying a cargo worth $130 to $180 million at current Brent levels, even small changes in the AP rate translate to seven-figure differences per voyage.

The Strait of Hormuz has been a JWC listed area at varying intensities for most of the past decade, with bursts of re-listing through the 2019 tanker incidents, subsequent regional escalations, and the current closure. When the area is “hot,” APs run several multiples of the steady-state baseline; when it cools, they fall back, but never quite to peacetime.

The numbers, in plain figures.

In peacetime, additional war premium for a single Hormuz transit on a VLCC runs roughly around $125,000 per voyage, a few basis points of insured value. That’s enough to be a real line item but small in the overall economics of a $200-million-class voyage.

In an active closure, trade press reports place per-voyage VLCC additional premium quotes in the $2 to $3 million range, with frequent intra-day repricing. Insurance is the line item that sets whether the operator can charter the vessel out at all. At those rates, a Cape of Good Hope detour becomes commercially preferable for any cargo whose buyer has any flexibility on delivery date.

Across cargo classes the same scaling applies. Container ship APs are smaller in absolute terms (smaller insured values, smaller cargoes), but the percentage move is similar. LNG carriers carry the largest insured values per voyage and see the largest absolute premium swings.

Why insurance is the leading indicator.

AIS data shows where vessels actually are and where they’re going. It lags the decision: a vessel at anchor today made the decision to wait three days ago when the operator priced the voyage and balked at the premium. Carrier customer-advisory announcements lag too; a public “we are rerouting” statement follows a posture change that’s already been priced. The AP quote leads them both.

That’s why the war-risk insurance multiple is one of the core indicators we track on the homepage. When it spikes, the spot fixtures slow within hours. When it eases, the bid for Hormuz-route cargoes comes back before the vessels actually move.

Clubs that have withdrawn coverage.

The other half of the insurance signal is which P&I clubs and war-risk underwriters have stopped writing Hormuz cover outright, not just repriced it. The list below covers the clubs publicly reported as having withdrawn, declined renewals, or imposed strict quotas for the Strait of Hormuz as of the last verified update on the homepage’s Insurance source chip.

• WithdrawnGard
• WithdrawnSkuld
• WithdrawnNorth Standard
• WithdrawnLondon P&I Club
• WithdrawnAmerican Club
• WithdrawnSteamship Mutual

Sources: Lloyd’s List, TradeWinds, Splash247, Reuters maritime desk, individual club circulars. Status is curated and re-verified weekly; if an entry has restored cover and we haven’t caught up, email a correction.

What can go wrong with the framing.

Reported AP quotes are not perfectly comparable across publications. They reflect specific underwriter conversations about specific voyages, vessels, and risk appetites. A figure that surfaces in trade press as “the” rate is usually an indicative midpoint, not a published market clearing price; AP markets are quote-driven and frequently voyage-specific. Operators with strong relationships and clean loss histories pay less; spot operators chartering uncovered vessels pay more.

Lloyd’s does not publish JWC pricing as machine-readable data. The figures we surface on the dashboard are an editorial reading of trade-press reporting (Splash247, Lloyd’s List, Reuters Energy, gCaptain) rather than a direct feed. Our methodology page documents this dependency explicitly.

What we watch.

On Straits, the live insurance multiple sits in the Assessment grid alongside the transit count, throughput percentage, and Brent move. The block turns to the alert color when the multiple crosses 4× the peacetime baseline, the threshold at which spot Hormuz traffic typically becomes uneconomic for anything but the most committed long-term contracts. For a deeper cut on how the rest of the dashboard fits together, the methodology page walks each indicator, including the supplementary-feeds disclosure.