Fresh geopolitical tensions around the Strait of Hormuz are beginning to send ripple effects far beyond the Middle East, forcing insurers and reinsurers to reassess risk exposures across shipping, energy infrastructure and global supply chains, according to new analysis released by Howden Re.
In its latest report titled “Strait of Hormuz update: Market implications of an evolving risk landscape,” the reinsurance broker warns that although the global reinsurance sector still maintains strong capital positions, sustained instability around one of the world’s most strategic maritime corridors is tightening conditions across marine, energy and political violence insurance markets.
The report reveals a market that remains operational but increasingly cautious, as vessel attacks, rising war-risk premiums and mounting uncertainty around claims development begin to test underwriting appetite and pricing discipline.
The Strait of Hormuz, through which a significant share of the world’s oil exports passes daily, has long been viewed as a critical chokepoint for global trade. But recent escalation in regional tensions has triggered severe disruption in maritime activity, forcing insurers to rapidly reprice risks and expand high-risk zones for vessels operating in or around the Gulf.
According to analysis from Howden Re Business Intelligence, global oil trade flows have fallen by more than 60 percent since the escalation intensified, while rerouting requirements and heightened security protocols continue to stretch supply chains and increase operating costs for shipping and energy operators.
The impact is already being felt across several specialty insurance lines.
Howden Re described current stress levels across marine hull war, marine cargo war and political violence business as “extreme,” citing attacks on vessels and energy infrastructure, sharp premium increases and growing concerns over the scale and complexity of future claims.
The broker also noted that recent large-scale losses in the wider market, including the Baltimore Bridge incident, have heightened industry concerns around accumulation risk and infrastructure-linked liabilities.
Richard Miller, managing director for Marine, Energy and Political Violence at Howden Re, said the crisis is reinforcing fears around geopolitical accumulation risk within specialty insurance portfolios.
“The Strait of Hormuz remains one of the most strategically significant maritime chokepoints in the world. Its positioning means disruption can quickly create rerouting pressures, timing lags and compressed supply-chain resilience,” Miller said.
“The market reaction reflects a reassessment of geopolitical accumulation risk across marine, energy and political violence portfolios.”
He added that while war-risk pricing has risen sharply since the crisis escalated, the deeper concern for insurers lies in the persistence of volatility and the uncertainty surrounding claims development at a time when many specialty insurers are still managing recent major losses.
“War-risk pricing has reacted sharply, but the more important story is around sustained volatility, uncertainty of claims development and the pressure this places on specialty insurers already managing large recent losses, which includes the Baltimore Bridge loss,” he said.
Despite the mounting pressure on affected business lines, Howden Re said the broader global reinsurance market remains resilient for now, supported by strong capital levels and relatively stable treaty renewal conditions.
The broker noted that treaty capacity remains broadly adequate, with pricing during the April renewal season largely consistent with January renewals. However, reinsurers are becoming increasingly watchful of inflationary pressures, deteriorating marine underwriting performance and the possibility of further escalation in geopolitical conflict.
Andy Foot, managing director for Marine, Energy and Political Violence at Howden Re, said underwriting scrutiny has intensified significantly, particularly around transit exposures and aggregation risks.
“The market has remained functional throughout the crisis, which is important,” Foot said.
“Capacity is still available, but underwriting scrutiny has intensified materially, particularly around transit exposures, WTPV aggregates and contingent accumulation scenarios.”
Beyond the insurance sector, the report suggests the crisis is beginning to exert pressure on the wider global economy, particularly through higher energy prices and logistics disruptions.
Brent crude prices have climbed above $100 per barrel since tensions escalated, while rising transportation and construction costs are beginning to filter into broader economic activity. According to Howden Re, revised OECD growth forecasts already reflect concerns around higher energy inputs and tighter supply conditions.
Michelle To, managing director of Business Intelligence at Howden Re, said the Strait of Hormuz crisis demonstrates how regional geopolitical conflict can rapidly evolve into a broader macroeconomic insurance event with cross-sector implications.
“The impact is not isolated only to specialty classes and the surrounding Middle East markets — there are much wider implications still yet to develop across global supply chains that will affect other lines of business,” she said.
She added that the situation is also testing the insurance industry’s ability to model interconnected geopolitical and economic risks in an increasingly volatile operating environment.
“Importantly, this event is also testing how the industry models interconnected geopolitical and economic risk. Clients are increasingly focused on resilience, scenario planning and understanding where concentrations exist across their global operations,” To added.
While Howden Re maintains that the immediate shock remains manageable within the global reinsurance system, the broker warned that any prolonged disruption or further escalation affecting major maritime trade routes could materially reshape underwriting conditions and pricing trends for the remainder of the year.
