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War Risk Insurance Premiums Soar to 10% of Ship Value for Strait of Hormuz Transit Amid US-Israel-Iran Conflict

EconomyIntl. RelationsSecurity & DefenceHIGH
Target:UPSC GS-IIIMPSCTeachingPrelims HighMains Medium
13 Mar 2026
~2 min
Source: Indian Express
Key Data:Insurance premium: 0.15-0.25% to 7.5-10%Strait of Hormuz oil flow: 20%Ships trapped: 140Bunker fuel price: $1,005/tonneConflict start: Feb 27
Bodies:Lloyd's ListInternational Underwriting Association (IUA)Policybazaar
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What This Article Covers

1.War-risk insurance premiums for Middle East Gulf voyages have surged from 0.15-0.25% to 7.5-10% of ship value following US-Israeli strikes on Iran, severely increasing shipping costs.

2.The Strait of Hormuz, a chokepoint controlled by Iran, handles 20% of global oil exports; 140 ships are currently trapped in the region as transit halts due to safety concerns.

3.Examiners will focus on the economic shock to global supply chains, the strategic importance of maritime chokepoints, and the role of institutions like Lloyd's in underwriting risk.

The Big Picture
Prelims · HighMains · Medium

The escalation of conflict in West Asia has caused war-risk insurance premiums for ships transiting the Strait of Hormuz to surge tenfold, now reaching up to 10% of a vessel's value. This spike significantly raises global shipping costs and threatens the security of a vital chokepoint handling 20% of the world's oil exports. For exam aspirants, this is a critical case study on the economic and security impacts of geopolitical instability on global trade.

Exam Lens

Quick Exam Facts From News

Insurance Premium SurgeFrom 0.15-0.25% to 7.5-10% of ship value
Strait of Hormuz Oil Flow20% of global oil exports
Ships Trapped in Region140 ships (approx.)
Bunker Fuel Price$1,005 per tonne (double pre-war cost)
Conflict Start DateUS-Israel offensive launched Feb 27

1-Minute Revision

  • ›Insurance Premium Surge: From 0.15-0.25% to 7.5-10% of ship value
  • ›Strait of Hormuz Oil Flow: 20% of global oil exports
  • ›Target this Data: Insurance premium surge from 0.15-0.25% to 7.5-10% of ship value.
  • ›Target this Nodal Body: Lloyd's List / International Underwriting Association (IUA) as key market intelligence and underwriting bodies.
  • ›Target this Geopolitical Point: The Strait of Hormuz handles 20% of global oil exports and is under Iran's control.

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Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

The Strait of Hormuz, a critical chokepoint mentioned in the news, is strategically located between which two bodies of water?

Q2Statement-basedHard

Consider the following statements regarding the impact of the West Asia conflict on shipping, as per the article:

1. War-risk insurance premiums for voyages through the Middle East Gulf have increased approximately tenfold.

2. The primary reason commercial shipping through the Strait of Hormuz has halted is the unavailability of insurance coverage.

3. The conflict has led to a doubling of bunker fuel prices, reaching over $1,000 per tonne.

Which of the statements given above is/are correct?

Q3Data-centricMedium

According to the article, what approximate percentage of global oil exports is facilitated by the Strait of Hormuz?

Q4Application/ImpactMedium

What is the primary economic implication of the soaring war-risk insurance premiums discussed in the news?

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