Marine, energy and political violence markets are under severe stress, according to a report from the reinsurance broker, although wider reinsurance capacity remains resilient, according to Howden Re analysis
Mounting losses from the Strait of Hormuz crisis are beginning to reshape underwriting conditions, pricing dynamics and risk appetite across marine, energy and political violence lines, according to Howden Re.
The reinsurance broker’s report, “Strait of Hormuz update: Market implications of an evolving risk landscape”, said persistent geopolitical instability in the Gulf is driving severe stress across marine hull war, cargo war, offshore energy and political violence markets.
Howden Re said the wider global reinsurance market remains resilient, with broader treaty capacity still robust despite mounting pressure in affected specialty classes.
Since the escalation began, vessel traffic through the Strait has collapsed, Brent oil prices have risen above $100 per barrel, and insurers have expanded high-risk zones while sharply increasing war-risk premiums.
Analysis from Howden Re Business Intelligence showed global oil trade flows have dropped by more than 60% post-conflict, while rerouting and security measures continue to disrupt supply chains and increase operating costs.
The report identified “extreme” stress levels for marine hull war, marine cargo war and political violence business, driven by vessel attacks, energy facility and property attacks, premium spikes and uncertainty around claims development.
Richard Miller, managing director, marine, energy and political violence at Howden Re, said: “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,” Miller said.
“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 said recent losses have reinforced market concerns around aggregation exposure, multi-party liability and prolonged claims development, particularly across marine and infrastructure-related risks.
Andy Foot, managing director, 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,” he said.
Despite mounting losses, Howden Re said the wider reinsurance market remains capable of absorbing the shock.
Capacity across global treaty markets remains abundant, with pricing at the recent 1 April renewals broadly aligned with 1 January outcomes.
However, reinsurers are closely monitoring inflationary pressures and the potential for further deterioration in marine and specialty claims.
Howden Re said the disruption is already feeding into inflationary components across major commodities, energy supply chains and construction costs.
The broker also cited downgraded OECD growth forecasts as economies adjust to higher energy prices and concentrated supply risks, with implications across sectors ranging from technology to consumer staples.
Michelle To, managing director, business intelligence at Howden Re, said: “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 said.
Howden Re concluded that the immediate shock remains manageable for the global reinsurance sector, but warned that prolonged disruption or further escalation across critical trade chokepoints could materially alter market conditions later in the year.
“Importantly, this event is also testing how the industry models interconnected geopolitical and economic risk,” To said.
“Clients are increasingly focused on resilience, scenario planning and understanding where concentrations exist across their global operations,” she added.
The report from Howden Re is available, here.
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