Howden Re, the reinsurance arm of broking group Howden, has released analysis on the Strait of Hormuz situation, stating that while global reinsurance capacity remains solid, conditions are tightening across marine, energy and political violence lines as geopolitical instability in the region continues.
The firm notes that these developments are influencing underwriting behaviour, pricing levels and risk appetite in exposed segments.
In its report Strait of Hormuz update: Market implications of an evolving risk landscape, Howden Re explains that ongoing disruption in the region is placing strain on marine hull war, cargo war, offshore energy and political violence covers.
Although wider reinsurance markets remain well supplied, Howden Re highlights worsening conditions in specialty classes linked to maritime and energy exposures. Vessel traffic through the Strait has fallen significantly, Brent crude has moved above $100 per barrel, and insurers have expanded high-risk zones while increasing war-risk pricing.
Howden Re estimates that global oil trade flows have dropped by more than 60% since escalation, with rerouting and security requirements continuing to disrupt logistics and increase operational costs. The report characterises current conditions as “extreme” stress for marine hull war, marine cargo war and political violence business, driven by vessel incidents, attacks on energy infrastructure, higher premiums and growing uncertainty around claims outcomes.
The reinsurance broker also points to recent large losses, including the Baltimore Bridge event, as reinforcing concerns around accumulation risk and complex liability exposure across marine and infrastructure risks.
Richard Miller, Managing Director for Marine, Energy and Political Violence at Howden Re, commented: “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. The market reaction reflects a reassessment of geopolitical accumulation risk across marine, energy and political violence portfolios.”
He added: “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.”
Howden Re also notes that recent events are increasing focus on aggregation risk and longer-tail claims development, particularly in marine and infrastructure-linked exposures.
Andy Foot, Managing Director for Marine, Energy and Political Violence at Howden Re, said: “The market has remained functional throughout the crisis, which is important. Capacity is still available, but underwriting scrutiny has intensified materially, particularly around transit exposures, WTPV aggregates and contingent accumulation scenarios.”
Despite heightened losses in affected lines, Howden Re says the wider reinsurance market continues to hold strong capital levels. Treaty capacity remains broadly adequate, with pricing at recent April renewals broadly consistent with January levels. However, reinsurers are closely watching inflationary pressures and potential weakening in marine and specialty underwriting results.
Howden Re adds that the disruption is beginning to influence broader economic conditions, including higher commodity prices, pressure on global energy logistics and increased construction costs. OECD growth forecasts have also been revised downwards as economies adjust to higher energy inputs and tighter supply conditions, with impacts felt across sectors beyond insurance.
Michelle To, Managing Director of Business Intelligence at Howden Re, added: “The Strait of Hormuz crisis demonstrates how geopolitical conflict can rapidly evolve into a multi-line, macroeconomic insurance event. 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 continued: “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.”
Howden Re concludes that although the immediate shock remains absorbable within the global reinsurance system, prolonged disruption or escalation in key maritime routes could significantly alter market conditions over the remainder of the year.
