The world’s largest insurance marketplace is set to break the Strait of Hormuz logjam with a new $400m (£316m) war-risk facility.

Lloyd’s of London has launched a new market consortium designed to provide additional marine war risk insurance capacity for vessels and cargo transiting the Strait of Hormuz.

Insurer Chubb will serve as lead underwriter, supported by participating Lloyd’s syndicates and specialist market partners, to bring together underwriting expertise with additional Lloyd’s market capacity to “support brokers and clients operating in a complex and fast-moving environment”.

The new marine war risk consortium will issue primary policies for vessels and cargo. It will provide up to $200m (£158m) of capacity separately for hull and protection and indemnity (P&I) risks, with an additional $200m (£158m) of dedicated cargo capacity.

Lloyd’s of London is the largest supplier of war insurance, writing between 70 per cent and 80 per cent of the world’s war business.

Patrick Tiernan, chief executive of Lloyd’s, explained: “This is a clear example of the Lloyd’s market’s role in bringing together specialist underwriting expertise, claims capability and global market capacity to support the resilience of marine supply chains.”

Evan Greenberg, chief executive of Chubb, added, “As a global leader, Chubb is actively working to provide coverage and organise needed capacity as vessels begin moving through the Strait of Hormuz. We are proud to lead this consortium, which provides our brokers and clients with a simple, efficient solution to their insurance needs while highlighting the importance our industry plays in supporting global commerce.”

Peaceful times ahead

The closure of the Strait of Hormuz as a result of the war in Iran had one of the biggest impacts on the global economy. As the Strait is responsible for transporting the majority of the world’s oil and gas, the war caused Brent Crude to reach a peak of $126 per barrel in March.

The launch follows the signing of an initial peace deal between the presidents of the US and Iran, aimed at ending the war. Donald Trump has declared the US-Iran peace agreement ‘all signed’ as G7 leaders work to finalise remaining details. The US president also announced that the Strait of Hormuz will remain open.

However, Peter Aylott, director of policy at the UK Chamber of Shipping, told City AM that shipping firms would need to see a “fairly robust string of evidence” that tankers stuck in the Persian Gulf could leave safely before they would have the confidence to sail through the Strait after the deal.