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Iran Conflict 2026
21JUN

P&I clubs rebuy war-risk cover in three days

2 min read
17:51UTC

Twelve P&I clubs cancelled their regional war-risk extensions after reinsurers pulled their backing, then arranged replacement cover within three days, Lloyd's List reported on 18 August.

ConflictDeveloping
Key takeaway

War-risk cover returned within three days at a price set by a week of bad data.

Twelve leading P&I clubs (Protection and Indemnity mutuals, which carry a shipowner's third-party liabilities) cancelled their ancillary regional war-risk extensions after reinsurers, the insurers who take slices of rare catastrophic risk off other insurers, withdrew their backing. The clubs then arranged replacement buyback cover, war-risk insurance repurchased at current market prices, within three days. Lloyd's List reported the sequence in its daily briefing on 18 August⁠1.

The cancelled class covers specialist war-risk liabilities rather than core Protection and Indemnity, which remained available throughout. Any account of Gulf shipping as uninsured overstates it. The same briefing recorded three ADNOC vessels targeted in the preceding week.

One reading has an insurance market behaving exactly as designed: cover withdrawn the moment the reinsurance layer vanished, cover repurchased at a fresh price seventy-two hours later. The other reading follows a single owner through the week, from continuous cover, to a lapsed policy, to a repriced one. Nobody budgets for that middle stage, and neither reading can be settled from outside the market.

What can be examined is the material the underwriter had when setting the new price. Pricing a Hormuz voyage means pricing the chance of a hit against how many voyages actually take place, and that figure arrived in irreconcilable versions this week. It also means reading a sanctions register whose most recent Iran entry, a 35-party shadow-banking designation dated 14 August, reached the gazette as scanned images rather than machine-readable text. Frequency data and legal data both degraded together, and war-risk premiums travel down the chain into the delivered cost of crude, gas and containerised freight.

Deep Analysis

In plain English

Twelve big insurance clubs that cover ships against war risks briefly cancelled some of their extra Gulf-related cover after the companies that back them, called reinsurers, pulled out. Within three days, the clubs found replacement cover and reinstated it. Ordinary insurance for cargo damage or crew injury kept working throughout; only the special war-risk add-on was affected. This matters because insurance is what lets a ship legally sail and get financed. A gap of even a few days can leave a shipowner unable to send a vessel through the strait, and this shows how quickly that cover can now come and go as the conflict continues.

Deep Analysis
Root Causes

P&I clubs do not carry Gulf war-risk exposure on their own balance sheets; they buy reinsurance to back it, so a reinsurer pulling its backing forces a club to cancel cover it can no longer itself afford to underwrite, independent of any change in the underlying shipping risk.

The $40 billion US Development Finance Corporation Hormuz reinsurance facility, launched earlier in the conflict, has had zero uptake, meaning the private market has no functioning public backstop to fall back on when a reinsurer withdraws; clubs must find replacement private capacity or go without.

What could happen next?
  • Consequence

    A three-day cancel-and-rebuy cycle shows Gulf war-risk cover can now disappear and return faster than during earlier phases of the conflict, when whole P&I clubs stayed out for weeks.

First Reported In

Update #172 · The strait nobody can count, insure or pay

Lloyd's List· 19 Aug 2026
Read original →
Causes and effects
This Event
P&I clubs rebuy war-risk cover in three days
Reinsurer withdrawal sits a layer above anything a shipowner can negotiate, so the new premium is not a matter of shopping around.
Different Perspectives
Office for Budget Responsibility
Office for Budget Responsibility
The OBR's 28 October forecast assumed $82 oil for 2026 and 2027, from market prices for the ten working days to 19 August, and blamed dearer wholesale energy on the war without naming Iran. It expects CPI inflation close to 4% in early 2027 even at that price.
Hengaw, Kurdish rights group
Hengaw, Kurdish rights group
Hengaw reported the 3 November hangings of Amirhossein Maleki and Amirhossein Ebrahimi in Isfahan, saying Ebrahimi was tortured into confessing and that nine of 12 people sentenced to death in the case have now been hanged. Iran's judiciary holds that the defendants killed members of the security forces.
FINTRAC, Canada's financial intelligence unit
FINTRAC, Canada's financial intelligence unit
FINTRAC worked with the US Treasury on the 6 November designation of eight money services businesses in British Columbia, Ontario and Quebec. Treasury says the businesses still operate, some under new names, so closing them falls to Ottawa.
Abdul Qadir al-Dakhil, Governor of Nineveh
Abdul Qadir al-Dakhil, Governor of Nineveh
Al-Dakhil cancelled three Mosul International Airport contracts on 7 November over alleged links to armed groups, after meeting Prime Minister Ali al-Zaidi in Baghdad. He named no group or company, and said the contracts will go to international companies.
Kuwait
Kuwait
Kuwait condemned the Houthi missile fired towards the Madinah region on 5 November and restated its support for Saudi Arabia, the Qatar News Agency reported. Its state tanker company, Kuwait Oil Tankers Company, is among the Gulf state fleets on Iran's expanded Hormuz list.
Scott Bessent, US Treasury Secretary
Scott Bessent, US Treasury Secretary
Treasury designated an alleged Chandigarh false-flag network on 4 November and eight Canadian exchangers on 6 November, while State sanctioned alleged MANPADS intermediaries. None of the actions touches an oil buyer; they target the paper, cash and procurement around Iran's trade.

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