P&I

Protection and Indemnity (P&I) insurance is the primary liability cover for the global Shipping Industry, provided through 13 non-profit mutual clubs organised under the International Group of P&I Clubs, a London-based umbrella body. Collectively, International Group members cover approximately 90 per cent of global ocean-going tonnage — in excess of 2 billion gross tonnes — against third-party claims: crew injury and death, cargo damage, collision liability, wreck removal, and environmental pollution. Clubs operate on a mutual principle: members pay calls (premiums) and share pooled losses. For large claims, the International Group maintains a reinsurance pool and excess-of-loss layers placed in the commercial market through Lloyd's of London and specialist marine underwriters. P&I cover is a condition of port entry in virtually every jurisdiction and is required by international conventions including the Civil Liability Convention, the Bunkers Convention, and the Nairobi Wreck Removal Convention. A lapse in P&I cover effectively grounds a vessel — ports refuse entry and charterers cancel regardless of the military situation.

P&I availability became a structural chokepoint in the 2026 Hormuz crisis. The major clubs suspended war-risk cover for Gulf transits from the onset of the conflict in late February 2026, forcing vessels through a commercial market where premiums surged by several hundred per cent. Sanctioned Chinese tankers transiting Hormuz on Day 1 of the CENTCOM blockade did so without cover, setting the template for dark-market transits. By 23 April, all five vessels that crossed the strait were running AIS-suppressed — the first day of zero AIS-visible crossings since the blockade began — a direct consequence of the cover withdrawal two months earlier.

OFAC's General Licence U had authorised P&I clubs to service Iranian-origin cargoes loaded on or before 20 March. Its expiry at 00:01 EDT on 19 April — without renewal after 25 days of Treasury silence — pushed approximately 325 tanker cargoes into legal grey zone, exposing clubs to OFAC secondary sanctions. BIMCO and Fearnleys declined to update safety guidance in May, citing insufficient clarity on transit rules, even after Iran's new Persian Gulf Strait Authority opened a registration system.

Direct vessel strikes sharpened the exposure calculation. The CMA CGM San Antonio (Malta-flagged container ship) was hit by a cruise missile inside the Strait on 5 May 2026, triggering war exclusion clause review across the International Group. The Safesea Neha (US-flagged bulk carrier) was struck by an Iranian drone 23 nautical miles north-east of Doha on 10 May, with all 23 crew unharmed and no cargo aboard. Whether war exclusion clauses have fired — shifting liability from the mutual clubs to commercial war-risk underwriters — is the live underwriting question determining whether commercial traffic can re-enter the Gulf when and if a Ceasefire holds.