Inside the insurance racket Iran wants to run in the Strait of Hormuz

Key Points:

• Iran has imposed a mandate requiring all commercial vessels to register with its newly formed Persian Gulf Strait Authority (PGSA) and carry Iranian-approved insurance to transit the Strait of Hormuz, a key global energy route.
• Western insurance underwriters reject this mandate, viewing it as a sanctions trap and a violation of international maritime law, warning that compliance could breach US sanctions and expose companies to Iranian jurisdiction.
• Due to these restrictions and the presence of Iranian underwater mines in international waters, most commercial shipping is rerouted through the narrower Omani channel under US military protection, significantly reducing traffic compared to pre-war levels.
• Lloyd’s of London, led by American insurer Chubb, has launched a $600 million insurance consortium to cover ships transiting the US-protected Omani channel, aiming to support maritime trade amid ongoing tensions.
• Clearing mines from the Strait of Hormuz is critical for restoring full maritime trade, which is vital for global energy markets and enabling the US and allies to impose tougher sanctions on Russian oil without causing price spikes.