Insurance costs for tankers entering the Persian Gulf have surged dramatically as geopolitical tensions escalated around the Strait of Hormuz.
The spike centers on the Additional War Risk Premium (AWRP), the insurance surcharge vessels must pay to enter conflict-exposed waters.
Before the U.S. attacked Iran on Feb. 28, AWRP typically cost about 0.25% of a vessel’s value. In the first week of March, that premium climbed to roughly 3%. That’s a staggering 1,100% increase.
For a modern crude tanker valued at around $100 million, that translates to roughly $3 million in insurance for a single voyage.
The Hidden Beneficiary
While shipowners are absorbing higher costs, one part of the financial system may quietly benefit: brokers.
Global brokerage giant Marsh & McLennan Companies Inc (NYSE:MRSH) plays a key role in placing marine insurance policies for shipping firms and energy companies navigating volatile regions.
Brokers like New York-based Marsh typically earn fees tied to the size of the premiums they arrange. That means when war-risk premiums spike, brokerage revenues tied to those policies can rise as well.
With a market value around $84 billion, Marsh is the world’s largest broker and a central player in the global marine insurance market.
Geopolitics Drive Insurance Demand
The surge in tanker insurance reflects a broader shift in how markets are pricing geopolitical risk.
Roughly 20% of the world’s seaborne oil passes through the Strait of Hormuz, making disruptions in the region a major concern for energy markets.
Even when oil prices remain relatively stable, rising security risks can send costs sharply higher — particularly for ships carrying crude and refined products.
That dynamic means geopolitical tension can ripple through unexpected corners of the financial system.
And while tanker operators face higher costs, the firms arranging the insurance behind those voyages may quietly see the upside.
Image: Shutterstock
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