Howden Re says the closure of the Strait of Hormuz has put “risk premia across the (re)insurance sector in flux”.

The impacts range from “elevated” and “high” to “severe” and “extreme” across 11 lines of business analysed by the reinsurance broker.

“Howden Re’s analysis highlights that this is not only a single-line loss event, but a scenario with the potential to affect the broader sector, unfolding in real time and testing the resilience of the global risk transfer market,” the company said.

Cover for marine war risk has suffered by far the biggest impact of the 11 business lines analysed, described as “extreme” after premium shot up by 1000%.

Insuring a $US100 million vessel for a Persian Gulf transit jumped from $US250,000 to $US375,000 per journey, Howden Re says.

“The effect on maritime insurance premiums is extraordinary based on the scale of repricing.

“Maritime insurance premiums for war coverage are surging dramatically, driving up the cost of moving energy through a critical maritime corridor.”

Howden Re does not expect capacity to pull back, despite the severity of conditions amid the US and Israel’s war on Iran.

Instead, the market is likely to respond with “greater discipline”.

“Reinsurers are likely to reduce line sizes on Middle East-exposed treaties and avoid overparticipation on programs with high energy concentration, port exposure or state-backed infrastructure. Programs will continue to be fully placed, though potentially with more markets and more measured line size.

“This is expected to be underpinned by a heightened focus on aggregation and accumulation risk, driven by cross-border missile ranges, maritime choke points, energy hubs and potential cyber-physical escalation.”