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(Sharecast News) - A Lloyd's of London consortium has been set up to provide additional marine risk insurance for ships transiting the Strait of Hormuz, it was confirmed on Friday.
The 337-year-old insurance market said the new consortium was responding to a "complex and fast-moving environment" and would issue primary policies for vessels and cargo. Chubb will be the lead underwriter, supported by syndicates and specialist market partners.
Patrick Tiernan, Lloyd's chief executive, said: "We welcome the launch of this new maritime war risk consortium, which will increase the depth and breadth of solutions available to brokers and clients as they respond to a complex and evolving situation in the Middle East."
The vital waterway, through which around 20% of the world's oil supplies normally pass, has been effectively closed since the US first attacked Iran at the end of February.
Washington and Tehran this week agreed to a 60-day memorandum of understanding, which will reopen the Strait of Hormuz. Oil prices have tumbled in response. But the waterway needs to be cleared of mines, and a permanent peace deal has yet to be secured. Israel and Hezbollah have also continued their attacks on each other.
Evan Greenberg, chief executive of Chubb, said the insurer was "activity working to provide coverage and organise needed capacity as vessels begin moving through the Strait of Hormuz".
The consortium will provide up to $200m capacity separately for hull and protection and indemnity risks, with an additional $200m for cargo capacity.
Marine war risk insurance traditionally provides cover for certain war, terrorism, piracy and related perils affecting vessels and cargoes.
Lloyd's is the world's biggest suppliers of war insurance.
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