Disruption in the Strait of Hormuz is reshaping war risk in marine insurance

By Dennis Marvin | Head of Marine, MSIG USA

As geopolitical tensions impact global shipping, insurers are taking different approaches to managing exposure and maintaining coverage

Recent attacks on commercial vessels in the Strait of Hormuz have had immediate implications for marine insurance markets. In response, many carriers moved quickly to cancel cargo war risk coverage across the region, often through broad, portfolio-wide actions rather than risk specific assessments.

That response is understandable given the stakes. An average of 20 million barrels per day of crude oil and oil products transited the Strait of Hormuz in 2025, accounting for around 25% of the world’s seaborne oil trade. The concentration of risk tied to a single corridor presents a significant challenge for underwriters. Blanket cancellations may have introduced new challenges for policyholders, limiting options at a time when flexibility is critical.

War risk insurance provides coverage for losses arising from acts of war and other geopolitical events that fall outside standard marine policies. In the current environment, many carriers have exercised their contractual right to cancel coverage with limited notice. In the cargo market, this can occur within 48 hours in the U.S. and within seven days in London markets. Reinstatement is often available, but typically at a higher cost due to increased volatility.

While some carriers have taken a blanket approach to reducing exposure, others are taking a more targeted, portfolio-level view. MSIG USA has taken a risk-based approach, evaluating its portfolio to understand where the activity is concentrated rather than implementing broad cancellations.

While carriers can cancel war risk coverage across their portfolios on short notice, MSIG USA instead analyzed where insureds were shipping and the level of risk present. In many cases, exposure to the most volatile corridors was limited, allowing coverage to remain in place rather than be withdrawn across the board. This has been well received by our insureds and broker partners, particularly in contrast to broader market-wide cancellations.

How can we manage these heightened risks without disrupting operations?

Geopolitical uncertainty is difficult to predict. Conditions can shift quickly, often with limited visibility, making it challenging for insurers and businesses to model scenarios and plan with confidence. The practical question for businesses is how to respond when coverage changes faster than shipping schedules. In this environment, flexibility and visibility are critical.

Close contact between carriers, clients, and brokers is essential

Maintaining regular communication between the carrier, client, and broker is critical to understanding current terms, potential changes and reinstatement options. Waiting until a disruption occurs can limit available choices.

Evaluate alternative shipping routes.

Where possible, rerouting cargo away from volatile areas can help reduce potential losses. While alternative routes may increase transit time or cost, they can provide greater predictability in an otherwise volatile environment.

Build supplier flexibility into risk management.

Businesses that rely heavily on a single region or corridor are more vulnerable to disruption. Expanding supplier networks can help maintain continuity when specific routes become constrained or unavailable.

It is important to recognize the limits of these strategies. For some sectors, particularly energy, routing alternatives are limited due to infrastructure and geopolitical constraints. In these cases, the focus shifts to risk transfer. This includes understanding available coverage options, pricing and how those costs are incorporated into operations.

Trade continues, even under strain

Despite uncertainty, global trade reached approximately $35 trillion in 2025, the highest level on record. While routes may shift and costs may increase, companies continue to operate through disruption, adjusting coverage, pricing and logistics as conditions change. For insurers and businesses alike, that means treating coverage and operations as active parts of decision-making.

For MSIG USA, this environment reinforces the importance of disciplined underwriting and a clear understanding of portfolio exposure. For businesses, it highlights the need to treat insurance as part of an active risk management strategy rather than a static purchase.

While disruption introduces new challenges, it also reinforces the importance of flexibility, informed decision-making and strong partnerships with brokers and policyholders.

Dennis Marvin is Head of Marine at MSIG USA, bringing nearly five decades of experience across marine underwriting and global risk management. He leads the Marine business with a focus on underwriting rigor and delivering solutions that reflect the complexity of today’s global trade and supply chain environment.