War-risk insurance rates for vessels transiting the Strait of Hormuz have surged once more after the fragile ceasefire underpinning last month's Islamabad Memorandum of Understanding (MOU) between the United States and Iran collapsed this week following fresh attacks on commercial shipping.

Marcus Baker, global head of marine at Marsh, said the past few weeks had brought genuine, if cautious, optimism to the market. Premiums had begun falling from their crisis peaks as both sides signalled a willingness to negotiate, although they remained well above pre-conflict levels.

"The current US/Iran position is clearly a concern and the statements around the MoU also create an enhanced risk environment in the region," Baker said. "The past few weeks had certainly seen a reduction in insurance premiums being charged for Strait of Hormuz transits following both sides' announcement regarding peace talks and whilst this had not reduced to pre-conflict levels, these decreases have been welcomed by the shipping industry."

A deal that barely held

The June 2026 MOU established a 60-day window for negotiations covering freedom of navigation, Iran's nuclear programme and sanctions relief. In practice, it lasted less than three weeks.

Iranian attacks on three commercial vessels prompted the US to strike around 90 military targets across Iran. Tehran responded with missile and drone attacks on US assets across several Gulf states, and President Trump declared the ceasefire "over" at the NATO summit on 9 July 2026.

London marine insurers also reported a sharp fall in requests for quotations this week as shipowners became increasingly reluctant to commit to transits, although cover remains available.

That broadly aligns with the position maintained throughout the conflict by the Lloyd's Market Association (LMA). Neil Roberts, head of marine and aviation at the LMA, said earlier this month that the market had faced more of a volume challenge than a pricing opportunity and that capacity had remained available throughout.

"There was always and there remains sufficient capacity, with cover available for a price," Roberts said. "That price reflects the risk."

The LMA has consistently maintained that insurance availability is not the primary reason vessels are avoiding the strait. Crew safety remains the dominant concern, although underwriters are now assessing each voyage individually.

What it will take to bring rates down

Baker was direct about where premiums now stand and what would be needed for them to fall.

"In the past few days rates have risen again following attacks on shipping by Iran in the region and it is unlikely that they will come back down until the market genuinely believes that the risk environment has changed. Cover is still available and rates have risen - to anywhere between 2% and 6% - but this roller coaster is unlikely to abate until a true and lasting ceasefire is maintained."

At the upper end of that range, a $100 million tanker would face an illustrative war-risk premium of around $6 million for a single transit, compared with a fraction of a percent of the vessel's value before the conflict began.

IMO Secretary-General Arsenio Dominguez this week condemned the attacks on commercial shipping as reckless and called on governments with influence over insurance and reinsurance markets to press for premiums that better reflect evolving conditions (UN News, 10 July 2026).

Underlying the renewed volatility is the dispute the MOU failed to resolve. Iran has signalled that it intends to retain a central role in determining how the strait operates and under what conditions vessels may pass, a position at odds with the international shipping community's expectation of free navigation.

Until that changes, war-risk premiums for Hormuz transits are likely to remain elevated and highly volatile. With Pakistan and Oman continuing to act as mediators, the London market will be watching closely for any sign that a durable settlement remains within reach.