Protection and Indemnity (P&I)

Protection and Indemnity (P&I) insurance is the primary liability insurance mechanism for the global Shipping Industry, covering shipowners and operators against third-party liabilities including cargo damage, crew injury, oil pollution, and wreck removal. P&I cover is provided by P&I Clubs — mutual insurance associations — rather than conventional commercial insurers, and is a legal prerequisite for most port entry and financing arrangements.

In the 2026 Iran conflict, P&I insurance has become a critical chokepoint in the Hormuz crisis. P&I Clubs have responded to the outbreak of hostilities and the IRGC's attacks on merchant vessels, including Indian-flagged tankers, by withdrawing cover or issuing war risk exclusions on Hormuz-transiting vessels. Without P&I cover, ships cannot transit legally, cannot access most ports, and cannot obtain financing — effectively making P&I withdrawal an indirect enforcement mechanism that operates parallel to the US naval blockade.

The Northwood Coalition's mandate to "reassure commercial operators" is partly a response to P&I withdrawal: governments providing naval escorts are signalling to insurers that the risk environment is manageable, which is a prerequisite for P&I Clubs to reinstate cover on corridor vessels. P&I withdrawal thus functions as an economic multiplier on the physical blockade.