There's another big reason why shipping companies and insurers aren't willing to risk the Strait of Hormuz

Core Viewpoint - The potential for an environmental catastrophe in the Persian Gulf due to oil tanker incidents is raising concerns among global insurers, brokers, and shipping companies amid geopolitical tensions [1]. Group 1: Environmental Risks - The Persian Gulf region lacks a sophisticated oil clean-up industry and technology, which increases the pollution risk associated with oil spills [3]. - The global insurance market has not adequately addressed the pollution risk, lacking data to calculate business disruption claims from potential oil spills [3]. Group 2: Insurance Coverage - Marine insurance includes coverage for ships' hulls, machinery, and cargo, but pollution coverage remains a significant concern [4]. - Coverage for hull, machinery, and cargo has become significantly more expensive, increasing by 4-6 times compared to the previous week due to rising geopolitical tensions [5]. - The Development Finance Corporation's $20 billion reinsurance facility currently does not cover essential pollution risks, focusing only on hull, machinery, and cargo [6]. Group 3: Government Intervention - The pollution risk in the Persian Gulf is likened to the uninsurable risks faced by the U.S. from terrorism post-9/11, suggesting a need for government intervention similar to the creation of the Terrorism Risk Insurance Act (TRIA) [7]. - Without a government backstop for environmental risks, commerce in the Persian Gulf may continue to face significant disruptions [7].