A fresh round of US-Iran military exchanges at the Strait of Hormuz has put the war-risk insurance market on notice. The conflict was already generating claims that exceed the sector's entire annual premium volume before the latest strikes.
The BBC reported that US Central Command struck rocket launchers and sea mine infrastructure on Larak Island. Larak sits directly on the strait's shipping lane, adjacent to Bandar Abbas, Iran's primary Gulf port. Iran's Islamic Revolutionary Guard Corps said the strikes killed two people and injured two others.
Iran responded with ballistic missiles at US bases in Jordan. Jordan's military said it intercepted all eight inbound missiles. Iran also claimed a drone strike on a UAE air base. The UAE denied that claim but confirmed it shot down one drone.
The BBC described the attack as the first on Iranian territory since President Donald Trump paused military operations in late July. The conflict began February 28, with coordinated US and Israeli strikes on Iran. The BBC reported that approximately 20% of the world's oil and liquefied natural gas flowed through the strait before hostilities began. Transit counts have since fallen to roughly 3% to 5% of pre-war volume, based on the latest Iranian situation tracking data.
Before the February 28 strikes, hull war-risk premiums for strait transits stood at approximately 0.25% of hull value. Dylan Saunders-Mortimer, UK war leader at Marsh, said rates surged to as high as 10% of vessel value at their peak. S&P Global, meanwhile, reported in late July that premiums had moved to between 7.5% and 10% of hull value. For a $100 million tanker, that is a per-transit insurance bill of up to $10 million.
The Larak Island location adds a specific variable. Underwriters assess war-risk premiums voyage by voyage under the Lloyd's Joint War Committee's Additional Premium mechanism. Larak sits at the strait's narrowest navigable point. A strike there differs qualitatively from a peripheral target, and that distinction matters to underwriters pricing the probability of a vessel being caught in a subsequent exchange.
Neil Roberts, head of marine and aviation at the Lloyd's Market Association, summarized the market position in July. "There was always and there remains sufficient capacity, with cover available for a price," Roberts told Xinhua. "That price reflects the risk."
The war has generated between $2 billion and $3 billion in market-wide claims across the war, terror and political violence segment, according to Howden Re data. That exceeds the segment's estimated annual global premium volume of $1.5 billion to $2 billion.
The scale of losses prompted an unprecedented government backstop. The US International Development Finance Corporation (DFC) launched a $20 billion maritime reinsurance facility in early March. By April 3, the facility expanded to $40 billion. Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr, and CNA joined alongside lead underwriter Chubb and the DFC, according to the agency's official announcement. Half of the $40 billion is assumed by the US government and half by the seven participating private insurers.
The facility exists in principle. Whether the August 31 exchange will test it depends on what follows in the coming days.
War-risk premiums for strait transits have remained elevated since the Lloyd's Joint War Committee expanded its high-risk listing to cover the entire Persian Gulf at the onset of hostilities. The listing will not be formally lifted until the committee sees sustained incident-free passage, independently verified demining, and a settled geopolitical picture.
The Red Sea precedent is relevant here. After Houthi attacks declined in late 2025, war-risk premiums in the corridor remained substantially elevated for months. Howden Re described Hormuz 2026 as a rare multi-line event likely to produce a permanent structural repricing of the marine war-risk baseline. The Hormuz disruption is larger in scale and involves a chokepoint with no viable bypass for most energy cargo.
For marine and cargo brokers with tanker clients, the August 31 exchange reinforces the conditions in place since February. Cover is available, the JWC listing is active, and each new military event resets the underwriter's incident timeline.
