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Lloyd's drafts clause allowing insurers to cancel tanker cover after Hormuz tolls
The model language targets payments for passage through the Strait of Hormuz by linking them to potential US, UK, or EU sanctions and terrorism law risk.
Shipowners considering whether to pay Iran to keep tankers moving through the Strait of Hormuz face a new risk to coverage, as Lloyd's marine underwriters have prepared model clause wording that can let insurers cancel a vessel's policy the moment a toll payment is identified.
Insurance Business reports that the Lloyd's Market Association, the trade body behind Lloyd's underwriters, drew up guidance for insurers to add to policies so they can withdraw cover if a payment for passage is found to violate US, UK, or EU sanctions and terrorism-related laws.
The clause is tied to signs Iranian authorities may be attempting to create a toll system for the strait, a major shipping lane moving roughly a fifth of the world's seaborne oil, and to concern that owners might quietly pay rather than divert routes around Africa.
Insurance Business also noted that the development comes amid already severe disruption for marine underwriters, with traffic falling from about 120 to 140 vessels per day to as low as single digits since February, when strikes on Iranian targets effectively closed the strait. The article says S&P Global logged ten transits on one Tuesday in July, down from 16 the previous Monday.