Housed in a distinct futuristic central London building, Lloyd’s of London maintains centuries-old traditions alongside high-stakes modern insurance. Inside, leather-bound tomes known as “Loss Books” continue to record maritime disasters, with entries still meticulously handwritten by liveried staff called “waiters” using swan quill pens and ink. These waiters, a nod to the 1688 origins of the market in Edward Lloyd’s Coffee Shop, are trained in calligraphy to maintain records that date back 250 years, including the sinking of the Titanic, which was insured for £1 million—a figure equivalent to approximately £101.6 million today. An entry in one of hundreds of such “Loss Books” details the demise of the Titanic in April 1912.
The current geopolitical instability in the Persian Gulf has forced the global insurance hub to pivot rapidly. Following strikes involving the United States and Israel on February 28, Tehran moved to blockade the Strait of Hormuz, causing a sudden spike in transit risks. As a result, war insurance policies were immediately canceled and reinstated at significantly higher costs. David Smith, head of marine at broker McGill and Partners, noted that underwriters are now forced to scrutinize individual risk factors on an almost hourly basis as the situation across the Middle East remains fluid. Overnight, the risks of transiting the strait skyrocketed, and insurance premiums needed to reflect that. “Following a period of relative stability and recovering transit volumes, recent events in the Strait of Hormuz have once again shifted the risk landscape,” he told. Smith quoted him a price and waited.
The financial impact of the blockade has been substantial. Before the conflict, premiums for vessels traversing the strait were roughly 0.25% to 0.5% of a ship’s value. In the aftermath of the February strikes, these rates surged to as high as 10%. For a $100 million oil tanker, this translates to a $10 million voyage cost. While hull war rates have since moderated to between 1% and 3%, the environment remains exceptionally volatile. Some underwriters have introduced “no-claims bonuses” to encourage safety, offering to refund half the premium if a vessel completes the transit without incident. Within 10 minutes the certificate of insurance was placed in the command deck of the vessel.
Operational procedures have been compressed to meet these extreme conditions. Underwriters now typically set policy prices just six hours before a planned voyage, a significant reduction from the standard 24 to 48-hour window. Policies are often issued with validity periods of only three to seven days, requiring frequent renegotiation. In one instance, a ship owner requested coverage for a same-day transit guided by the US Navy, leaving brokers with only minutes to secure and bind the policy so the crew could have proof of coverage on the bridge before entering the danger zone. “It took myself and three brokers… screaming at underwriters on the phone,” Smith recalled. The crew insisted on seeing the policy for themselves to ensure their family members would receive compensation should anything befall them on the perilous journey through the strait.
Despite the availability of insurance, many ship owners are avoiding the waterway entirely due to the persistent threat of attacks. Data from the International Maritime Organization indicates that at least 14 seafarers have died since the conflict erupted. According to Neil Roberts of the Lloyd’s Market Association, while no vessels listed in this year’s Loss Book have been destroyed, more than 50 ships have been attacked, and thousands of vessels remain effectively stranded. Allianz reported last month that approximately 1,150 cargo ships, carrying goods valued at $125 billion, are stuck in the Persian Gulf. Dozens of others have been less fortunate, with at least 14 seafarers killed since the conflict began, according to the International Maritime Organization, while that vessel sailed through safely.
The long-term outlook for the region remains uncertain, with risks involving underwater mines, narrow navigation routes, and ongoing cross-border strikes. Experts suggest that if the deadlock continues, many vessels could be written off as “total losses” if they remain trapped for months. Furthermore, insurance coverage is complicated by legal restrictions; underwriters will not cover ships that pay tolls to sanctioned Iranian institutions, as such payments would likely violate international maritime law. Ben Stone of Aon noted that premium rates are unlikely to drop significantly until the market observes a sustainable decline in regional attacks and a clear resolution to the current standoff.
