One of the components of the chokepoint that has done the most work to determine who actually moves a vessel through the Strait of Hormuz, and on what financial terms, is the war-risk insurance market. The component is technical and is mostly invisible in the public narrative around the crisis. It is, however, the single most important commercial-side gatekeeper for the operator class, and on the data available as of the first week of May 2026, it has been operating as a soft closure of the chokepoint in parallel to the operational and political closures the public coverage has focused on.
The headline figures from the most recent reporting in the Strauss Center, S&P Global, Windward, the World Economic Forum, and Albany Antree are these. Additional War Risk Premiums (AWRP) on Gulf tanker transits eased from approximately two and a half per cent of Hull and Machinery value per seven-day period at the March peak to approximately one per cent in late March, with some successful transits paying about zero point eight per cent after no-claims bonuses. Some stranded tankers paid up to ten per cent of H&M value in mid-March. All twelve members of the International Group of Protection and Indemnity Clubs, the risk pool that covers approximately ninety per cent of the world’s ocean-going tonnage, gave seventy-two hours’ notice in late February and early March of cancellation of parts of their war cover in the Gulf. Major clubs including Gard, Skuld, and NorthStandard issued formal cancellation notices for the Persian Gulf. As of 5 and 6 May, the Arabian Gulf, the Strait of Hormuz, and the Gulf of Oman and Arabian Sea remain rated as critical maritime-risk areas.
This post reads what the underwriter-side gatekeeping is doing to the cost of moving a vessel through the strait, why the gatekeeping is operating effectively as a chokepoint closure that no party has formally declared, and what an institutional answer on the Suez or Panama model would change about the underwriter posture.
The arithmetic at the vessel level
A Very Large Crude Carrier (VLCC) at modern construction cost carries an H&M value in the range of one hundred million to one hundred and twenty million United States dollars. A one per cent AWRP per seven-day period on a one-hundred-million-dollar hull is one million dollars per week. A two and a half per cent rate is two and a half million dollars per week. A ten per cent rate is ten million dollars per week. The pre-war benchmark was zero point one to zero point one five per cent, or roughly one hundred to one hundred and fifty thousand dollars per week. The current rates are an order of magnitude or two above the pre-war benchmark.
A standard Hormuz transit is short on the AWRP clock. The vessel is in the rated area for approximately twenty-four to seventy-two hours, depending on routing and lay times at Iranian or Gulf-state terminals. The premium is, however, typically rated on the full seven-day period basis with no proration in the modern market, so the transit pays roughly the full weekly rate. Translated into per-transit dollars, the current AWRP cost is approximately one million dollars at the eased one-per-cent rate, two and a half million dollars at the March-peak rate, and up to ten million dollars at the stranded-tanker rate. This figure is in addition to the rest of the cost stack analysed in the 23 April cost stack post, which already incorporated war-risk pricing at a more conservative assumption than the data now indicates.
The combined cost stack at the present configuration is, by this updated reading, in the range of seven to twelve million dollars per VLCC transit, with the marginal component being insurance rather than fuel, port dues, or routing. The insurance component is now the dominant single line in the per-transit cost.
The P&I cancellation channel
The seventy-two-hour cancellation notices from the International Group P&I Clubs are a separate channel from the AWRP rate adjustments. The AWRP rate is a price; the P&I cancellation is a withdrawal of cover. The two work together in the present configuration. The AWRP price for the hull is high; the P&I cover for the liability tail is partially or fully withdrawn for the Gulf area.
P&I cover, in shorthand, is the liability-side insurance that protects the shipowner against third-party claims, crew injury, pollution, salvage, cargo damage, and similar exposures. In normal commercial operation, P&I cover is part of what makes a vessel transit lawful in many flag-state, port-state, and counterparty jurisdictions. When the P&I clubs cancel parts of their cover, the operator faces a choice between transiting without standard liability protection (which many jurisdictions and counterparties will not accept), arranging substitute cover through specialised single-trip underwriters at substantially higher rates, or not transiting. The third option is the dominant choice in the present configuration, and it is part of why the transit count is at five per day rather than one hundred and thirty-eight.
The Windward analysis, the earlier post on the five-transits number for 4 May, and the operator behaviour reflected in those numbers all describe the same underlying fact: the underwriter posture is effectively a chokepoint closure that no governmental party has formally declared. The closure runs through the commercial-insurance channel.
Why the underwriters are doing what they are doing
The underwriter posture is rational on the underwriters’ side. Insurance pricing reflects loss expectation, which is a function of incident frequency, incident severity, and the institutional capacity to manage incidents when they occur. The 2026 Hormuz configuration has elevated all three. Incident frequency: Iranian seizures, missile claims, the UAE missile alert on 4 May, and the pre-ceasefire kinetic operations of March and early April raised the observed incident rate by an order of magnitude over the pre-war baseline. Incident severity: the cargo values, hull values, and crew populations on Gulf tanker transits are high, and the financial exposure from any single severe incident is significant. Institutional capacity: there is no chokepoint authority on the Suez or Panama model to coordinate salvage, dispute resolution, pilotage, and casualty management, so any incident is managed by the principal parties to the dispute on an ad hoc basis, which the underwriters cannot price as a reliable source of mitigation.
The third element is the one this site has been arguing about since 18 April. A treaty-backed Hormuz transit authority, with a standing salvage and pilotage arrangement, a recognised dispute-resolution forum, and a published transit protocol, would change what the underwriters have to assume about the institutional capacity to manage incidents. The change would not, on its own, lower the AWRP to the pre-war benchmark on the day a treaty was signed. The change would, however, give the underwriters something to price against. At present, there is no standing institutional party for the underwriters to look to for casualty management; the residual capacity is the principal parties to the dispute, whose primary commitments are to their respective war postures, not to chokepoint casualty management.
The insurance-side comparator at Suez and Panama
Suez and Panama transit, in normal operation, runs on standard commercial hull and P&I cover with no AWRP surcharge for the chokepoint itself. The chokepoint is a non-event for the underwriter pricing. During specific disruption episodes (the Ever Given grounding, the 2024 Red Sea attack period, the Panama drought constraint), the underwriters price the specific disruption, not the chokepoint as a structural feature. The Suez Canal Authority and the Panama Canal Authority are part of the institutional baseline the underwriters rely on for casualty management. The baseline does the work that, at Hormuz, the underwriters cannot rely on.
The relevant analogy is closer than it might appear. The shipowners, charterers, and protection-and-indemnity clubs that transit Suez and Panama every day are largely the same firms that would transit Hormuz under any working configuration. The underwriter market is a single global market with shared analytical infrastructure across the major chokepoints. The reason Suez and Panama do not carry chokepoint-specific AWRP and Hormuz carries one to ten per cent AWRP is not that the underwriter market treats them differently in some arbitrary way. It is that the institutional baselines are different in a way the underwriter market correctly prices.
Project Freedom and the underwriter posture
The United States Project Freedom convoy escort operation, analysed in the earlier post on the convoy, does not change the underwriter posture in any structural way. Convoy escort is an operational risk-mitigant that the underwriters can incorporate into their pricing on a transit-by-transit basis. It is not an institutional fact. It does not provide standing salvage capacity, dispute resolution, or casualty management beyond the immediate convoy operation. If a vessel within a Project Freedom convoy is damaged in transit, the underwriters’ casualty-management options are the same set of ad hoc options they have today. The convoy reduces the probability of the incident; it does not change the institutional response to the incident.
The site’s reading is that AWRP rates may compress somewhat for Project Freedom-escorted transits during the operation, on a routing-and-timing basis, but that the structural elevation of the chokepoint AWRP relative to the pre-war benchmark will persist until the institutional configuration changes. The 14-point proposal’s mechanism language, if filled in with substance over the thirty-day timeline analysed in the 15-vs-14 post, is the channel through which the underwriter market would re-price toward the pre-war benchmark.
What the per-week underwriter bill costs the global economy
A one-per-cent AWRP rate applied to the H&M value of the vessels that would, in pre-war operation, transit Hormuz weekly produces a weekly insurance line in the eight-to-fifteen-billion-dollar range, depending on transit composition and routing. Most of that line is not currently being paid, because most of the vessels are not transiting; what is being paid is the rate on the vessels that are transiting (five per day rather than one hundred and thirty-eight), plus the static cost on the stranded vessels. The weekly bill scales linearly with transit volume, so the underwriter-side cost of reopening Hormuz to the pre-war volume under the present configuration would be the multi-billion-dollar figure rather than the present sub-billion. The institutional answer is the only mechanism that compresses both the rate and the volume back toward the pre-war commercial baseline. The proposed rate schedule prices what a working authority would charge per transit. The underwriter cost saving is the second-order economic effect of the institutional configuration.
Sources: World Economic Forum, “What stopping war-risk insurance in the Strait of Hormuz tells us,” April 2026; S&P Global, “Marine war insurance for Hormuz dries up as Middle East war intensifies,” March 2026; Strauss Center, “Strait of Hormuz – Insurance Market”; Windward, “Strait of Hormuz Shipping Falls After Insurance Pullback”; PropertyCasualty360, “Maritime War Risk Insurance in the 2026 Iran Crisis,” March 2026; gCaptain, “Gulf War Risk Insurance Pulled as Reinsurers Exit”; Albany Antree, “War-Risk Insurance Update: Hormuz, 6 May 2026”; Al Jazeera, “Maritime insurers cancel war risk cover in Gulf,” March 2026; International Group of Protection and Indemnity Clubs public notices of cover modifications by Gard, Skuld, and NorthStandard; this site’s prior analyses on the cost stack (23 April), the UNCLOS vacuum (24 April), the ICS statement (25 April), the five-transits post (4 May), the 14-point mechanism language (4 May), Project Freedom (4 May), and the 15-vs-14 geometry (4 May).