Passing through the Strait of Hormuz now comes with an insurance bill of up to US$2 million for a single Korean-flagged oil tanker, shipping industry sources told Maeil Business, the first time a concrete premium figure has been attached to a transit since the waterway became a flashpoint following the US-Iran military confrontation earlier this year.
The amount, worth roughly 300 million won, was levied on HMM’s very large crude carrier Universal Winnerho after the vessel cleared the strait on May 20. The ship was the first Korean-flagged tanker to make the crossing since the route was disrupted by armed clashes between the US and Iran in late February – a disruption that stretched beyond 80 days.
Before the current crisis, war risk insurance was the primary coverage product for vessels operating in conflict-adjacent waters. The heightened threat environment around the Strait of Hormuz has since given rise to a separate transit-specific insurance product, charged on top of existing war risk policies. The rate is tied to a ship’s insured value and differs by vessel class and size, industry sources told Maeil Business.
Under current market conditions, Hormuz transit premiums are running at 3% to 5% of vessel value – a level that is dozens of times above what would be considered standard, according to Maeil Business. The bill received by HMM for Universal Winnerho was, according to industry sources cited by the publication, lower than the prevailing rate would typically produce, with the company’s commercial standing and government diplomatic engagement cited as factors that helped reduce the charge. Vessels that have not yet transited are not spared, either. Ships sitting idle inside the strait continue to accumulate war risk insurance costs with each passing day, leaving operators paying regardless of whether their ships are moving or waiting.
Around 25 Korean-flagged vessels were still anchored inside the Strait of Hormuz as of late May, held back by concerns over seizure. If the fleet were to exit the strait one by one under the current insurance pricing environment, the total premium outlay across all 25 ships could climb into the hundreds of billions of won, according to industry estimates reported by Maeil Business. The insurance costs do not stay confined to the shipping sector. If crude oil shipments from the Middle East resume under these conditions, carriers facing large transit premiums are likely to pass at least part of those costs along the supply chain. That dynamic could push up domestic oil import prices, feeding through into consumer prices more broadly.
Finance Minister Koo Yun-cheol addressed the wider economic picture at a ministerial meeting in Seoul on May 15, according to the Korea JoongAng Daily. “While Korea has shown strong resilience against crises by posting record exports, current account surpluses, and stock market indexes, the prolonged war has started to have a visible impact on the real economy and people’s livelihoods,’ Koo was quoted as saying by the Ministry of Finance and Economy. The government, he said, intended “to minimize challenges to people’s livelihoods caused by the Middle East crisis while closely monitoring situations at home and abroad.”
The Financial Services Commission (FSC) moved on May 21 to assemble a domestic insurance backstop. Ten non-life insurers – including Hyundai Marine & Fire Insurance and Samsung Fire & Marine Insurance – agreed to pool capacity and offer around 300 billion won in transit war coverage through a co-underwriting structure, Maeil Business reported. The arrangement has notable gaps, however. It extends to only 10 of the 25 stranded vessels, all of which belong to smaller shipping operators. Larger carriers, including HMM, fall outside the program’s scope. The government is also not paying premiums on behalf of shipowners; it is providing support that lowers the cost of obtaining coverage rather than eliminating it. The financial burden on individual operators remains.
Industry observers have noted that the ceiling on insurance rates ultimately sits with global reinsurers, which absorb a large share of the risk being transferred. Those reinsurers are not expected to soften their pricing posture until conditions in the region stabilize. An unnamed shipping industry official put the case for further government action in direct terms, according to Maeil Business. “To prevent the collapse of the shipping industry, a key national sector, and a surge in domestic prices, the government urgently needs to provide additional direct support that also covers major shipping companies,” the official said. The government said it is working on an economic strategy for the second half of 2026 that incorporates lessons from the Middle East crisis, with the plan expected to be published by the end of June, the Korea JoongAng Daily reported.
