With their shipping clients caught between decisions made in Washington and Tehran, Treasurer Jim Chalmers' warning that "the Australian economy is in lots of ways, hostage to those developments and those decisions", would have resonated with marine brokers across the country.
The marine insurance industry prefers calmer waters - but right now, almost every headline out of the US-Iran conflict has a ship, a strait, or a stranded tanker attached to it. For example, Iran's military command accusing the United States of violating the ceasefire by firing on an Iranian commercial ship in the Gulf of Oman and then President Donald Trump confirming that US Marines "have custody" of the vessel after boarding it.
Dr Lurion De Mello, senior lecturer in the Department of Applied Finance at Macquarie University told Insurance Business that the key dynamic worth highlighting is that insurance has shifted from being a background cost to a genuine constraint.
“Prior to the conflict, war‑risk premiums on Middle East routes were typically a few hundred thousand dollars per voyage,” he said. “Following Red Sea attacks by Iran‑aligned groups, those costs doubled or tripled, and in the Strait of Hormuz this year some crude and product tankers have faced insurance costs running into the millions for a single transit.”
For marine insurers and brokers this could be the single biggest repricing event the market has faced since the Tanker War of the 1980s - but a big pressure point may not be where most people think.
De Mello said hull insurance is very expensive because of the damage ships can sustain during conflicts but he said cargo is where the market is getting seriously stress tested.
"Hull war‑risk premiums have surged," he said, "But the real stress point for brokers is increasingly the cargo."
His read on where the real risk - and therefore likely the largest insurance bills - could cut to the heart of what brokers are now scrambling to place. London's Joint War Committee has expanded its "high-risk" designation to cover the entire Persian Gulf, and major maritime insurers have suspended or repriced war-risk coverage for ships travelling through the Strait of Hormuz and the Persian Gulf, at-large.
Today, quotes are landing between 1% and 5% of hull value, with some extreme quotes reaching 10%. For larger or higher-value vessels commonly valued between $200 million and $300 million, premiums could exceed $7.5 million to $15 million or more in the most elevated scenarios.
But hull is only half the conversation broker clients are having. De Mello's point is that cargo - the "load," in shipping parlance - is where the loss severity can explode. A single Very Large Crude Carrier (VLCC) can carry roughly two million barrels of crude worth more than $250 million. When one of those shipments is damaged, detained, or blocked, the cargo claim can dwarf the hull claim.
"Hull insurance represents the first pricing shock, while cargo insurance has become the focal point for loss severity, claims volatility, and systemic risk for insurers and brokers," he said.
The second force driving broker phones off the hook is charter rates, and here De Mello's data is eye-watering. Based on industry figures, he estimates daily charter rates for LNG tankers have surged to around half a million US dollars - up from a pre-conflict norm he pegs at $150,000 to $200,000.
Those rates feed directly into the exposure calculation underwriters are modelling for both hull and cargo. Every extra day a cargo spends at sea - rerouted around the Cape of Good Hope, idling off the UAE coast, or zig-zagging back toward Kuwait to stay out of missile range - is another day of accumulating war-risk exposure, demurrage, and potential delay-in-start-up claims for energy clients.
Around 1,900 commercial vessels are now stranded around the Strait of Hormuz, according to Anadolu Agency - with broker Howden earlier estimating the Gulf-bound tankers alone were carrying $15.3bn of oil and gas.
De Mello said, currently, what keeps the country's fuel supply intact is very large crude carriers running diesel from the United States.
"If it wasn't for their diesel coming to Australia, we would be in serious trouble," he said.
Every one of those diesel shipments needs cargo cover before it leaves port. With Marsh's global head of marine Marcus Baker warning marine insurance rates could double or worse, the cost of that cover is flowing straight through to the terminal gate price - and ultimately to the pump.
With Trump's ultimatum on the table and the IRGC primed for retaliation, marine brokers could be about to find out exactly how resilient their cargo wordings really are.
