The Gulf war reaches UK businesses through cost, not claims

Eight months after the US and Israeli strikes on Iran on 28 February, ships still cross the Strait of Hormuz, at a price and under fire. For a UK business the war shows up in three places: the cost of moving goods through the Gulf and the Red Sea, the cost of energy and materials, and supply that stops without anything being damaged. A standard UK commercial property policy excludes war. Its business interruption section needs physical damage before it pays. Most of the cost of this war therefore stays with the business, not its insurer.

Where the strait stands

Iran declared the strait closed on 4 March. A ceasefire agreed on 8 April was meant to reopen it, but restrictions returned within weeks. The truce collapsed on 8 July, when Iran struck commercial ships. Since then the strait has carried traffic whose owners will pay for war cover and accept the risk.

That risk is rising. Lloyd’s List Intelligence counted at least 104 vessels without Iranian links through the strait in the week to 11 October, 17% fewer than the week before. It recorded at least 28 attacks or security incidents in the first half of October, the highest monthly total since the war began. On 13 October the container feeder GFS Pride was hit, caught fire and sank. The IMO counts it as the second vessel sunk since 28 February.

The Red Sea is the other route out of the region. The Houthis entered the war on 28 March. Marsh put Bab al-Mandeb war rates at 0.5% of hull value in July, up from 0.3% before the Houthis declared an embargo on Saudi shipping on 20 July.

What the marine market charges

Before the war, war cover for a tanker through Hormuz cost about 0.25% of hull value per transit, according to Marsh. Brokers told the Financial Times in early October that it now costs 6–10%. On a supertanker that can reach $20 million for one voyage into the Gulf.

The class has lost money this year. Howden Re estimated in August that war, terror and political violence claims across the market would reach $2–3 billion, against $1.5–2 billion of premium the class writes globally in a year. Underwriters will want that back. We expect war rates to stay well above their pre-war level for some time after any settlement, and freight costs with them.

What this means for a UK business

Goods at sea

War is not part of a cargo policy’s standard cover. It has to be added. Marine war cover is written on short notice of cancellation, commonly seven days, so the rate can change between order and shipment. A business moving goods through the Gulf or the Red Sea should confirm three things on its open cover: that war and strikes are included, the notice period, and whether the war rate is fixed or set shipment by shipment.

Supply that stops

Business interruption cover pays for lost income after physical damage to insured property, or, with an extension, to a named supplier’s premises. A strait closed by a navy, or a cargo that cannot sail, damages nothing the policy names, and the war exclusion applies as well. A supplier who cannot ship is the business’s own loss. Stock, a second source and cash reserves are the protection. Business interruption, properly explained sets out how the trigger works.

Energy and materials

UK chemical and steel makers added surcharges of up to 30% in March to cover higher electricity and feedstock costs. Steel feeds the cost of rebuilding a commercial building. A buildings sum insured last set before the war should be checked before renewal: if it falls short of the rebuild cost, the average clause reduces each claim in proportion. Underinsurance and the average clause works the arithmetic through. Gas is the larger exposure, and our note on this winter’s gas supply covers it.

What would change this view

A settlement that holds, with transits back near pre-war levels for several weeks, would bring war rates down. Until then we treat Gulf freight and energy as elevated costs that insurance does not cover. A fall back to 0.25% soon after a settlement is unlikely, given what the class has paid out this year.

Sources

1. Lloyd’s List Intelligence, Strait of Hormuz brief, 22 October 2026. Transits and incidents.
2. Insurance Business, Hormuz sinking hands marine war underwriters another total loss, 14 October 2026. GFS Pride; brokers’ rates as reported by the Financial Times; Marsh pre-war rate; Howden Re estimate.
3. S&P Global Commodity Insights, Middle East shipping insurance costs rise on Hormuz risks: Marsh, 22 July 2026. Bab al-Mandeb rates.
4. Wikipedia, 2026 Strait of Hormuz crisis and Economic impact of the 2026 Iran war, read 28 October 2026. Dates of the closure, ceasefire and collapse; the Houthis’ entry; UK surcharges, citing the BBC of 19 March 2026.

This note gives general information on events and how insurance responds to them. It is not insurance, legal, actuarial or investment advice. Figures are as reported by the sources listed on the dates given, and will move.