Gard and NorthStandard, the two largest Protection & Indemnity clubs by insured tonnage, issued cancellation notices on Wednesday for The Persian Gulf, the strait of Hormuz, and Iranian waters. They join American Steamship Owners Mutual P&I, London P&I Club, and Skuld, which issued notices earlier in the week. Lloyd's of London separately classified Iran, The Gulf, and parts of The Gulf of Oman as high-risk zones. Every major P&I club in the global maritime insurance system has now withdrawn cover, effective midnight Thursday 5 March.
P&I insurance is the structural backbone of international shipping. It covers third-party liability — collision, pollution, crew injury, cargo loss. Without it, no port authority will grant entry, no bank will finance a voyage, no flag state will permit a vessel to sail. A tanker without P&I cover is not merely expensive to operate; it is legally inoperable under the International Convention on Civil Liability for Oil Pollution Damage.
During the Iran–Iraq Tanker War between 1984 and 1988, when more than 400 commercial vessels were attacked in The Gulf, insurance markets adjusted premiums sharply but never fully withdrew. Lloyd's war risk premiums reached 7.5% of hull value at that conflict's peak. A complete withdrawal of all major P&I clubs from an entire maritime region has no precedent in the modern insurance market.
VLCC daily freight rates had already hit $423,736 — an all-time record exceeding the 1991 Gulf War peak. Hormuz traffic was down 80% from pre-conflict levels. After midnight Thursday, the remaining traffic faces a binary choice: sail uninsured — which no major shipping line or flag state will permit — or stop. President Trump's government-backed insurance through the Development Finance Corporation covers political risk but does not replace P&I liability cover; they are different products addressing different legal requirements. Reinstatement after hostilities cease requires a full syndicated risk reassessment by each club's underwriting committee — a process that historically takes weeks, not days.
