Opinion: Analysing chokepoint exposures after the Strait of Hormuz crisis

The 100+ day closure of the Strait of Hormuz gave the re/insurance market a live, large-scale test of what a major chokepoint closure looks like across every line of business at once.

The use of Hormuz as a lever in the conflict between Iran and the United States of America hurt many non-combatant parties and revealed the asymmetric power that countries that can control chokepoints wield. It challenged insurance models and caused many countries to reconsider their dependencies.

The direct losses were serious.

Approximately 250 vessels carrying around 20,000 seafarers were trapped inside the Gulf for months, holding insured cargo with no route to market. Fourteen seafarers were killed. At least 17 merchant ships were damaged. The world’s single largest LNG export facility, Qatar’s Ras Laffan, which produces about 30% of global LNG, sustained damage that may take years to repair.

Market signals fired in sequence.

The Lloyd’s Joint War Committee expanded its listed areas, triggering mandatory war risk premium requirements and forcing underwriters to reassess exposure across vessel types and cargo classes. Oil and LNG spot prices spiked as supply disruptions outpaced the market’s ability to reroute.

Long-term supply contracts came under immediate pressure; buyers scrambled for alternative sources, and sellers found themselves unable to deliver. Monitoring services recorded a sharp rise in vessels broadcasting false position data and ships running without transponder signals to avoid detection or sanction.

The indirect losses are harder to price.

Some European buyers of Qatari LNG face four sequential chokepoints on that supply route (Hormuz, Bab el-Mandeb, Suez, Gibraltar) such that a failure at any point breaks the chain and rerouting around the Cape of Good Hope is challenging for many reasons. Spot LNG cargoes can divert, but the majority of Qatari supply moves under long-term contracts tied to specific buyers and regasification terminals.

Boil-off losses on extended voyages add further cost. And if Ras Laffan is offline, there is nothing to reroute regardless of the shipping lane.

Qatar is also the world’s largest exporter of ammonia and urea, the feedstocks for nitrogen fertilisers, meaning the prolonged closure compressed food production margins and triggered knock-on effects in commodity pricing, trade credit, and sovereign stability far beyond the Gulf.

Strategic petroleum reserves were drawn down across several OECD countries, masking the full commodity price impact but also challenging the national security risk tolerances for those countries. The degree to which modern supply chains have been optimised for cost and speed at the expense of resilience was briefly made painfully concrete.

Howden Re estimated in March 2026 that market-wide claims from the closure would reach $2–3bn against a total annual global gross written premium for the war, terror and political violence class of $1.5–2bn.

Losses from a single chokepoint event were projected to exceed the entire annual premium base for the class worldwide. That is not a pricing anomaly. It is a structural signal that the market cannot absorb a $2–3bn event in a single corridor without either retreating from the class or fundamentally repricing its exposure to network risk.

The political conditions that produced the closure have not been resolved. The ships moving again is not the same thing as the risk going away.

Panama Canal & Malacca Strait

Hormuz has demonstrated that chokepoint leverage can be applied for over 100 days, that commercial pressure eventually forces a negotiated exit rather than a military resolution, and that the interval between the two can be measured in months.

Both state and non-state actors operating near strategic passages or ports now have a data point about what the international commercial response looks like, how long pressure can be sustained, and how vulnerable the global market is.

The Ever Given blocked the Suez Canal for six days in 2021, causing an estimated $9.6bn per day in delayed trade. Violence in the Red Sea since late 2023 has forced vessels around the Cape of Good Hope, adding 10–14 days to Europe-Asia transit times. The economic cost of that diversion in fuel, charter and delay is quantifiable.

In 2024, El Niño-driven drought reduced Panama Canal daily transits, throttling Pacific bulk and LNG flows for months. These events were always part of the threat landscape but the accumulation of exposure across cargoes, vessel classes, routes, chokepoints and nodes has not been assembled in a way that permits underwriters to price the risk systematically.

Malacca and Panama are the two most consequential candidates for the next major disruption. The causes are less relevant than the exposure and the impact is more tractable. Both straits carry cargo classes with different rerouting elasticity. Bulk commodities can, with cost and delay, find alternative corridors. Semiconductors, automotive components, and time-sensitive manufactured goods largely cannot.

A Malacca closure would disproportionately affect the flow of electronics and advanced manufacturing supply chains in ways Hormuz did not. The inevitable cascades would affect business continuity, trade credit and property coverage through different sectors of a book, at different speeds, with different recovery profiles.

Under a Panama closure scenario, bulk grain, coal and LNG bear the weight, transit times balloon on Pacific routes, and the cascade runs through agricultural commodity pricing, food security and energy supply in ways that touch a different set of lines entirely.

Chokepoints concentrate vessel traffic; ports concentrate cargo value. Singapore, at the southern end of the Malacca Strait, handles roughly a fifth of global container throughput. A serious disruption there does not just delay vessels in transit. Cargo sitting in storage, onward connections to Northeast Asia, and the manufacturers waiting on time-sensitive components all fail together, across marine, cargo, property and business interruption lines that are rarely aggregated into a systemic view.

A re/insurer with a diversified portfolio may hold marine war cover on the vessels, cargo facilities on the goods carried, property and business interruption cover on the manufacturers depending on those goods, trade credit cover on contracts that collapse when delivery fails, and energy cover on the downstream terminals.

When the chokepoint closes, all of these move together. The exposures sit in different teams, priced by different actuaries, against different models. The aggregate picture is rarely visible until after the event.

Mapping & exposure analysis

The instinct when faced with chokepoint risk is to reach for probabilistic models to assign frequencies and severities and build scenarios from historical data.

For some hazard drivers this works. El Niño cycles can be modelled with reasonable confidence. Cyclone seasons have probabilistic structures that underwriters have learned to price. Arctic ice extent, tidal patterns, engineering failure rates all yield to statistical treatment.

But closure risk does not depend on a causal chain. A predictive model could not have anticipated the disruptions of Hormuz, Suez or Bab El-Mandeb. The solution is not to invest in a black-box system that claims to read geopolitical tea leaves that even the world’s best analysts cannot fathom. The intelligence community has spent decades and vast sums trying to predict geopolitical discontinuities; the actuarial profession should not expect to solve this problem on the side.

What the industry can do is focus on understanding exposure and vulnerability with far greater precision than current practice allows. The threat may not be empirically knowable; but the exposure is.

Mapping which cargo classes transit which passages at what volumes and values, under what contract terms and with what rerouting options, is tractable analytical work. So is building scenario frameworks. Not predictions, but structured models of consequence that let underwriters understand where the most dangerous accumulation sits in a portfolio before the event, not during it.

Structured analysis of port-level risk concentration, corridor-level chokepoint exposure, and cross-line accumulation at the portfolio level can be inferred from bilateral trade flow data and shipping lane modelling. The building blocks like vessel tracking, commodity flow data and contract intelligence, are available. What is largely missing is the analytical frame that assembles them into something an underwriter or accumulation manager can act on.

That analysis has different implications for different stakeholders. For sovereign actors, it informs strategic reserve policy and bilateral trade diversification.

For underwriters, it means accumulation limits across correlated lines of business and pricing that reflects network dependencies that single-voyage models ignore.

For cargo owners and shipowners, it illuminates where contract flexibility and rerouting optionality are worth paying for. For commodities desks, it frames where physical and financial hedges provide genuine protection.

The re/insurance industry’s standard response to emerging systemic risk is to wait for sufficient loss history before pricing it properly. Chokepoints present a structural problem with that approach: when the loss history arrives, it will be large, correlated, and already on the books. The Hormuz closure was a warning. The question is whether the industry heeds it.