80–1988: The Iran-Iraq Tanker War was the most prolonged maritime conflict of the 20th century. Iraq attacked 283 vessels; Iran attacked 168. Cargo premiums surged roughly 300% at the start of hostilities, and hull rates for tankers transiting the Kharg Island terminal reached as high as 5–7.5% of vessel value. Total insurance claims over the eight-year conflict reached approximately $2 billion — a staggering number for the era. And yet, crucially, shipping never stopped. The profit motive outweighed the premium cost. U.S. Navy re-flagging operations and naval escorts, introduced in 1987, eventually stabilized the market and brought rates back down.
1990: The Gulf War was comparatively brief. Premiums rose sharply — to around 0.025% for most Gulf ports, with spikes in the northern Arabian Gulf — but the war ended quickly, merchant shipping suffered minimal damage, and insurers largely came out profitable.
2003: The Iraq Invasion triggered a more acute spike, with hull rates reaching 3.5% around Iraqi waters before falling back to 0.25% within a year as the military situation stabilized.
2024: Houthi Red Sea Attacks — the most recent precedent — saw war-risk premiums for Red Sea transits jump from approximately 0.07% to roughly 1% of hull value. Shipping rerouted around the Cape of Good Hope. Trade adapted, painfully and expensively, but it adapted.
2026 — The difference is structural. In every prior crisis, insurance remained available, and shipping continued at a price. In 2026, insurers cancelled coverage entirely within 72 hours. The strait was not merely dangerous — it was, for practical purposes, uninsurable. Premium rates have blown past all historical precedents within three weeks. And unlike the 1987 scenario, where U.S. naval escorts eventually provided market stability, the current military environment involves direct state-versus-state conflict with a nuclear-threshold adversary. The standard actuarial assumption — that conflicts are localized, temporary, and ultimately survivable for the market — is being tested in real time.
The Strauss Center at UT Austin had long assessed that insurance costs alone would never fully stop Gulf
