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Protection and Indemnity (P&I)
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Concept

Protection and Indemnity (P&I)

Maritime liability cover whose withdrawal can halt ships even when waterways remain physically open.

On 18 August 2026, twelve leading P&I clubs withdrew ancillary war-risk cover for Gulf shipping after reinsurers pulled their backing, then arranged replacement buyback cover within three days, Lloyd's List reported.

Last refreshed: 19 August 2026 · Appears in 2 active topics

Key Question

Can ships still obtain Gulf war-risk cover after repeated vessel strikes?

Timeline for Protection and Indemnity (P&I)

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Background

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 its members cover roughly 90 per cent of global ocean-going tonnage, more than 2 billion gross tonnes, against claims for crew injury, cargo damage, collision liability, wreck removal and environmental pollution.

Clubs operate on a mutual principle: members pay calls (premiums) and share pooled losses, with the International Group placing excess-of-loss reinsurance through Lloyd's of London and specialist Marine underwriters for the largest claims. P&I cover is a condition of port entry in virtually every jurisdiction and is required under conventions including the Civil Liability Convention, the Bunkers Convention and the Nairobi Wreck Removal Convention.

A lapse in cover effectively grounds a vessel: ports refuse entry and charterers cancel regardless of the military situation on the water. That mechanism is why the withdrawal or reinstatement of war-risk cover, rather than the physical state of a strait, has repeatedly determined whether Gulf shipping can move.

Key Issues
Sanctions grey zone

Sanctions silence strands tanker cargoes

OFAC's General Licence U, which had let P&I clubs service Iranian-origin cargoes loaded on or before 20 March, expired at 00:01 EDT on 19 April after 25 days without renewal. That pushed roughly 325 tanker cargoes into a legal grey zone and exposed clubs to secondary sanctions.

By 23 April, all five vessels crossing the strait of Hormuz were running AIS-suppressed, the first day of zero AIS-visible crossings since the blockade began, a direct consequence of the cover gap.

War-risk cost floor

War-risk pricing outlasts the ceasefire

Western war-risk insurance returned to The Gulf corridor at 3 to 4 per cent of hull value in June 2026, against 0.25 per cent before the conflict, embedding roughly $1 to $1.50 a barrel in extra cost on a very large crude carrier cargo.

On 18 June, Brent fell 6.9 per cent as markets priced the Islamabad Accord as a completed Hormuz reopening, but no P&I club lifted its war-risk exclusion and no commercial tanker transited the strait.

Common Questions

Reference

What is the difference between hull insurance and P&I insurance?
Hull and machinery insurance covers physical damage to the ship itself and is placed in the Lloyd's and company markets. P&I insurance covers third-party liabilities, crew injury, cargo loss, pollution, collision. A vessel needs both. In the Hormuz crisis, hull underwriters cut premiums while P&I clubs kept war-risk exclusions in place, leaving a gap.
What is Protection and Indemnity insurance in shipping?
P&I insurance is mutual third-party liability cover provided by non-profit clubs owned by shipowners. It covers liabilities including pollution, cargo loss, crew injury, and collision damage. The thirteen clubs of the International Group collectively insure around 90% of the world's oceangoing tonnage.
Is Hormuz P&I insurance restored after the Iran ceasefire?
As of 25 June 2026, P&I war-risk cover for The Gulf and Hormuz had not been reinstated by the major clubs. London hull underwriters had halved premiums, but hull and P&I are separate markets, a vessel needs both to sail legally. The DFC reinsurance facility launched to bridge the gap but recorded zero uptake.Source: Lowdown
What happened to the CMA CGM San Antonio in the Strait of Hormuz?
The CMA CGM San Antonio, a Malta-flagged container ship, was struck by a cruise missile inside the strait of Hormuz on 5 May 2026. The strike triggered an International Group review of whether war exclusion clauses had fired.Source: Lowdown
Can ships get insurance to pass through the Strait of Hormuz in 2026?
Major P&I clubs suspended war-risk cover for Gulf transits from the onset of the conflict in late February 2026. By 23 April, all Hormuz crossings were AIS-dark, with vessels self-organising to be invisible. BIMCO and Fearnleys both declined to update safety guidance in May.Source: Lowdown
What is OFAC General Licence U and why did its expiry matter?
OFAC General Licence U authorised P&I clubs to service Iranian-origin cargoes loaded on or before 20 March 2026. Its expiry on 19 April without renewal pushed roughly 325 tanker cargoes into legal grey zone, exposing clubs to secondary sanctions if they continued coverage.Source: Lowdown
Can a shipping company lose P&I cover because of Iran sanctions?
Yes. US secondary sanctions mean P&I clubs risk OFAC penalties if they continue to cover vessels carrying Iranian-origin cargo once a relevant OFAC general licence expires. Clubs have previously withdrawn cover from sanctioned trades rather than risk losing access to the US financial system.Source: /t/iran-conflict-2026/68/gl-u-lapses-saturday-treasury-silent-25-days
What happens to Iranian tankers when General Licence U expires?
When OFAC's GL-U expires on 19 April 2026, P&I clubs face sanctions exposure if they continue to service the roughly 325 tankers carrying Iranian-origin cargoes loaded before 20 March. Without cover, those ships cannot enter most ports and insurers may refuse claims.Source: /t/iran-conflict-2026/68/gl-u-lapses-saturday-treasury-silent-25-days
Why did P&I clubs close Hormuz to shipping?
The major P&I clubs cancelled war-risk cover for Gulf and Hormuz waters effective 5 March 2026, after Gard and NorthStandard issued the first cancellation notices. Without P&I cover, ships cannot legally sail (they have no third-party liability insurance for pollution, cargo damage, or crew injury) creating an effective operational shutdown.Source: Lowdown
What is P&I insurance and why does it matter for the Hormuz blockade?
protection and indemnity insurance covers 90% of global shipping against liability claims. Without P&I cover, ports refuse entry and charterers cancel, making the cover withdrawal as effective as a physical closure of the strait for commercial traffic.
Why do ships need P&I insurance to enter ports?
International conventions such as the Civil Liability Convention (CLC) and the Bunkers Convention require ships to carry P&I certificates as proof of financial liability cover. Port state control authorities verify this; ships without valid cover can be detained or refused entry.Source: https://www.igpandi.org
Who are the main P&I clubs for shipping?
The 12 clubs of the International Group of P&I Clubs cover around 90% of global ocean-going tonnage. Major clubs include the UK P&I Club, Gard, Skuld, Britannia, Standard Club, and the American Club, all headquartered principally in London, Oslo, and New York.Source: https://www.igpandi.org/group-clubs/
What does P&I insurance cover for ships?
Protection and Indemnity (P&I) insurance covers shipowners against third-party liabilities including crew injury, cargo damage, collision, wreck removal, and pollution. It is provided by mutual clubs rather than commercial insurers and is required for port entry worldwide.Source: https://www.igpandi.org/article/what-is-pi-insurance/
Source Material
Protection and indemnity insuranceInternational Group of P&I ClubsProtection and indemnity insuranceInternational Group of P&I Clubs

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Updated 19 August 2026. Editorial standards.