War and shipping have collided before. What makes the 2026 Hormuz crisis different, according to a new Ti Insight report, is the speed with which insurance pricing and cover restrictions turned a strategic waterway into a route that mainstream commercial traffic could barely use.
Within 48 hours of the US-Israeli strikes on Iran, war-risk premiums for Hormuz transits reportedly jumped from around 0.2% to 1% of hull value, adding about $800,000 to the cost of a single VLCC voyage. For some vessels with US, UK or Israeli links, underwriters quoted 5–7.5% or refused cover altogether.
The result was not just higher costs, but a collapse in traffic. The report says transits through the Strait of Hormuz fell by more than 80%, from an average of around 77 vessel crossings a day in January to just four by 3 March.
That is the document’s central point, and its most unsettling one: insurance did not merely respond to the crisis, it became one of the mechanisms that shut the corridor down in practice.
Not a blockade on paper, but a closure in practice
The paper argues that the market reaction was faster and harsher than in earlier wartime shipping crises. During the Iran-Iraq Tanker War in the 1980s, premiums surged, but the market stayed in place and the strait was not closed for an extended period. In 2026, by contrast, cover was repriced or restricted so aggressively that normal commercial transit became unviable for much of the market.
A major reason lies higher up the insurance chain. According to the report, all 12 members of the International Group of P&I Clubs, which cover around 90% of the world’s ocean-going tonnage, issued 72-hour cancellation notices for war-risk extensions in the Gulf after reinsurance support was withdrawn.
That exposes a structural weakness in global freight: the real choke point is not only the shipowner, but the insurance and reinsurance architecture behind the voyage. Once that layer starts to retreat, cargo flows can seize up very quickly.
The uncomfortable truth behind “cargo protection”
For freight forwarders, shippers and cargo owners, the report’s other important message is that the insurance products sold by logistics companies have limits in a severe war-risk event. Major forwarders and shipping lines have built increasingly sophisticated cargo-protection offers over the years, but the paper says these are largely retail products sitting on top of wholesale underwriting.
That distinction matters much more in a crisis than in normal times. If the underlying wholesale market withdraws or reprices beyond commercial viability, the customer-facing insurance offer may no longer solve the real problem.
The report also underlines another practical risk: carrier liability alone is not enough. Under the bill of lading system, liability for lost or damaged cargo is capped well below the commercial value of the goods. That is why shipper’s interest insurance exists in the first place.
One example cited in the paper is the 2018 Maersk Honam fire, after which uninsured shippers faced General Average deposits of up to 54% of cargo value to recover their own goods. The case is not linked to Hormuz, but the report uses it to show what happens when cargo owners discover too late that standard carrier liability offers far less protection than they assumed.
Perhaps the most disturbing line in the whole document is that, as of late March 2026, the strait remained effectively closed to mainstream commercial traffic, with only vessels carrying an Iran nexus or having negotiated IRGC consent transiting regularly. That suggests that in a crisis of this scale, access to a vital global trade artery can end up shaped as much by political and military realities as by normal commercial risk assessment.
Read more: Up to $2m demanded from some ships in Hormuz
