War Risk Insurance Status for Vessels Passing Through the Strait of Hormuz: Separating Facts from Sensational News

Introduction and the Crisis at the Heart of Global Trade

Since the beginning of 2026, escalating geopolitical tensions in the Middle East, specifically within the USA-Israel-Iran axis, have caused profound tremors in the Strait of Hormuz, one of the most critical bottlenecks of global maritime trade. According to U.S. Energy Information Administration (EIA) data, this strategic waterway, through which approximately 20-21% of the world’s seaborne crude oil and condensate passes, has suddenly become the epicenter of hot conflicts and retaliatory attacks. While this situation has caused great concern among shipowners, charterers, and cargo owners, it has also raised serious questions regarding the sustainability of international supply chains.

In this atmosphere of chaos, intense and sensationalist news has begun to appear in the mainstream media and parts of the maritime press, suggesting that war risk insurance for ships has completely disappeared and that the strait has become “uninsurable” for commercial vessels. However, a close examination of maritime law and the dynamics of the insurance market reveals that these claims do not fully reflect the reality.

Misinterpretation of Notices of Cancellation

The perception in the media that “insurers have completely withdrawn from the region” is primarily based on the 72-hour Notices of Cancellation (NoC) issued by P&I Clubs (Protection and Indemnity Clubs) and other marine insurers. This notification mechanism stems from the provisions of Institute War and Strikes Clauses (Hulls–Time) 1/10/83 Cl.3 and Institute War and Strikes Clauses (Cargo) 1/1/2009 Cl.3. Following the intensification of conflicts, many international insurance consortiums issued these notices, which was interpreted by the public as a definitive termination of insurance.

In the context of maritime insurance law, however, these notices do not mean that coverage has ended permanently or entirely. As emphasized by the International Union of Marine Insurance (IUMI), this is a highly standard procedure. Insurers use these notices for “Listed Areas” where risk has suddenly spiked to suspend current policies, reassess the risk, and reinstate the policy with updated terms, warranties, or Additional Premiums (AP). In short, insurance protection has not vanished; rather, pricing and risk conditions have been brought back to the table for renegotiation.

Lloyd’s Market Association (LMA) and the Real Causes in the Sector

Attributing the serious decline in ship traffic in the Strait of Hormuz solely to a “lack of insurance” is to overlook the root of the problem. The Lloyd’s Market Association (LMA), the heart of the London insurance market, has explicitly denied these sensational reports in its official statements. LMA officials stated that war risk insurance capacity is still available in the London market and globally, and that shipowners who wish to do so can continue to obtain this coverage.

The real reason for the dramatic drop in commercial vessel traffic in the region is not financial or insurance-related, but entirely due to physical security concerns. Ship captains and owners are refraining from entering the region because they find the risks to crew safety and the safety of the vessel to be unacceptably high. In other words, ships are not avoiding the Strait of Hormuz because they cannot find insurance, but because of the massive risks to life and property inherent in navigating through an active war zone.

Rising Costs and the Risk of a Financial Blockade

The fact that war risk insurance is “available” in the market does not mean it is “cheap” or “easily accessible.” War risk premiums, which were approximately 0.25% (2.5 per mille) of a vessel’s Hull & Machinery (H&M) value before the conflicts, have skyrocketed to the 1% to 5% range, and in extreme cases, even to 10%. For massive tankers worth millions of dollars, the insurance cost for a single transit can reach tens of millions of dollars.

Furthermore, due to market uncertainty, the validity period for insurance quotes has dropped from 24 hours to as low as 12 hours, making operational planning extremely difficult. While this is not a de facto military blockade, the astronomically rising costs create a “financial blockade” that is commercially insurmountable. Although international market-stabilizing initiatives, including attempts to increase reinsurance capacity, are on the agenda, the financial pressure on shipowners remains severe.

International Law

Another critical dimension of the crisis in the Strait of Hormuz is the right of passage under the United Nations Convention on the Law of the Sea (UNCLOS). The strait holds the status of a critical waterway open to international navigation, and under UNCLOS Articles 37-44, ships have the right of transit passage. UNCLOS Art. 44 imperatively dictates that coastal states cannot suspend transit passage, while Art. 38/1 stipulates that transit passage must be “continuous and expeditious.”

However, the fact that Iran has not signed and ratified the 1982 Convention creates a critical legal uncertainty regarding the transit passage regime. Iran asserts that it holds the position of a “persistent objector” against this regime. According to this doctrine, which finds its roots in the ICJ’s Anglo-Norwegian Fisheries (1951) decision, if a state has consistently and continuously objected to a customary rule during its formation, that custom may not bind said state. While Iran’s argument has a serious legal basis, its international acceptance is highly controversial; Iran’s occasional de facto consent to transit passage (acquiescence) may weaken its status as a persistent objector.

Risks such as interference with navigation, stopping, or detention of ships by coastal states for military security reasons are among the fundamental perils covered by war risk insurance. The ICJ’s Corfu Channel (1949) decision is the landmark precedent confirming that the right of passage through international straits cannot be prohibited by the coastal state, even in peacetime.

International Armed Conflict and Belligerent Rights

Evaluating the legal situation in the Strait of Hormuz solely from the perspective of peacetime law of the sea does not align with current reality. Iran is in a de facto International Armed Conflict (IAC) with the US-Israel coalition. According to the ICRC’s conflict classification framework, an armed conflict between two or more states constitutes an IAC, regardless of whether the parties formally recognize it as such (Common Article 2 of the Geneva Conventions).

As a direct result of this classification, Iran possesses belligerent rights within the framework of jus in bello. These rights include:

1. Declaring and enforcing a naval blockade (San Remo Manual paras. 93-104);
2. Visit and search of neutral vessels (San Remo Manual paras. 118-124);
3. The right to seize enemy cargo or contraband.

It is important to note that the San Remo Manual on International Law Applicable to Armed Conflicts at Sea (1994) is not a binding international treaty but a restatement of customary law. Nonetheless, as an authoritative source widely accepted in international maritime law, it is the primary reference text used to determine the limits of a belligerent’s rights.

The possibility of Iran implementing a selective blockade, particularly against US and Israeli-flagged vessels or those carrying cargo destined for these countries, constitutes one of the most critical risk factors directly affecting the insurance market. In evaluating the scope of war risk insurance policies, ignoring this IAC dimension is a legally unacceptable omission.

Force Majeure Status

In the event of a full or partial closure of the Strait of Hormuz, force majeure clauses in carriage contracts, commodity sale contracts, and charterparties will come into play. Under the ICC Force Majeure Clause 2020, Art. 1(e)-(g), war, hostilities, and blockades are listed as types of force majeure events.

However, it must be emphasized that the ICC 2020 model clauses are not binding legal norms; they apply only if explicitly incorporated into the contract by the parties. Therefore, it is mandatory to examine the force majeure provision of each contract individually. Exemption from liability due to an impediment under CISG Art. 79 and the doctrine of frustration of purpose in English law should be evaluated in parallel.

Charterparties, CONWARTIME/VOYWAR, and Legal Disputes

This extraordinary and volatile situation in the Strait of Hormuz brings with it complex legal disputes in the field of maritime commercial law. How the war risk clauses in charterparties signed between shipowners and charterers will be interpreted in light of current events is of great commercial importance.

The BIMCO CONWARTIME 2013 (time charterparty) and VOYWAR 2013 (voyage charterparty) clauses grant the shipowner the right to refuse to proceed to ports or waters declared as war zones. These clauses are triggered by definitions of “war, warlike operations, hostile acts,” and the current conflict environment in the Strait of Hormuz, especially considering Iran’s status as a party to an IAC and the active hostilities in the region, should be considered within the scope of these definitions.

In this context, the following questions are of critical legal importance:

• Can a shipowner justifiably refuse to go to the Strait of Hormuz by citing increased war risks?
• Who is responsible under the contract for the massive Additional War Risk Premiums (AWRP) reaching millions of dollars?
• How are obligations in freight contracts shaped in the event of a deviation to the Cape of Good Hope or another route?

Risk Management

In this challenging period, it is a vital necessity for maritime companies to conduct a detailed review of the “War Risk” coverage and navigating limits of their existing insurance policies with the assistance of specialized lawyers. When notices of cancellation are received, strategic steps must be taken immediately to negotiate new terms and additional premiums.

Furthermore, how increased delay and freight costs will be reflected in commercial contracts, the timing of force majeure notices, and the adaptation of charterparty clauses to the current risk environment must be carefully planned.

Conclusion

To summarize, widespread and sensational reports suggesting that war risk insurance has completely disappeared in the Strait of Hormuz in recent days do not reflect the truth; coverage is still available in global markets, but costs and legal conditions have become dramatically more onerous. The primary reason for the standstill in ship traffic in the region is not the inability to find insurance in the market, but the actual environment of hot conflict that directly threatens the lives of seafarers and the safety of massive commercial vessels.

The maritime industry has faced crises throughout history and has always known how to overcome these challenges. However, minimizing the cost of such complex crises is only possible through accurate market information, correct analysis of current legal frameworks, especially IAC/jus in bello and force majeure dimensions, and the construction of a solid legal foundation.

For more information and legal support on these matters, you may contact Esenyel & Partners.