Trump-mandated US$20Bn maritime reinsurance plan misses 'what is at stake'

Industry response to DMC reinsurance facility announcement

A representative for international marine insurance provider NorthStandard underscored that the maritime insurance market continues to provide insurance and said that "The US scheme misses that point".

"The issue is not the availability of insurance. Cover is available and always has been. And while expensive, it is not prohibitive given what is at stake," NorthStandard head of external affairs Mike Salthouse told Riviera in an emailed statement. 

Safety for crews and cargoes remains the determining factor in decisions for vessels to transit the Strait of Hormuz, Mr Salthouse said. 

"The strait will remain ’blocked’ for so long as it is unsafe for vessels to attempt the transit. Until the US Navy and partners can provide credible protection to shipping and/or the military threat from Iran becomes suitably degraded, vessels will not attempt the transit." 

Mr Salthouse said that "industry standard war clauses" in vessel charter parties and contracts of affreightment mean that crews "cannot be contractually compelled to attempt the transit while it remains factually unsafe to do so".

Overall maritime risk level remains ’critical’: JMIC

The international naval coalition-led Joint Maritime Information Center (JMIC) in Bahrain said in a 7 March note addressing regional safety for maritime vessels in the Middle East that the threat remains assessed at critical.

The critical threat assessment indicates that "attacks are likely and conditions remain highly hazardous for commercial shipping".

"Confirmed attacks against commercial vessels continue across the regional operating area," JMIC’s assessment said, noting that "incident reporting includes vessels and offshore energy infrastructure operating within Persian Gulf waters, reinforcing that the threat environment extends beyond the immediate Strait of Hormuz approaches."

The JMIC also pointed to an attack on a United Arab Emirates-registered tugboat that was sailing across the Strait of Hormuz to assist a damaged container ship on 6 March. The attack is thought to have been the deadliest thus far in the latest conflict in the region, with multiple seafarers thought to have been killed while attempting to aid Malta-flagged Safeen Prestige, which had also been attacked by Iranian ballistics, 18 nautical miles off Khasab, Oman.

"The observed pattern of strikes against anchored vessels, drifting ships, and assistance vessels indicates a campaign focused on creating operational uncertainty and deterring routine commercial movement rather than a sustained attempt to sink vessels. The cumulative effect of these attacks, combined with electronic interference and insurance constraints, is producing a significant reduction in commercial traffic through the Strait of Hormuz despite the absence of a formally declared closure," the JMIC note said.

With the International Union of Marine Insurance clarifying on Friday that war cover remains available for owners and operators wishing to take it, London insurance underwriters reported that some 40 vessels had, at the time, crossed through the Strait of Hormuz since 1 March.

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