Insurers may ditch ships that pay Iran a toll

Insurance companies can cancel policies for ships that pay tolls to Iran or any other country to transit the Strait of Hormuz, a major trade group announced Thursday, injecting a new layer of uncertainty atop the oil market quagmire that the Iran war has unleashed.

Lloyd’s Market Association, a group representing maritime insurance underwriters, said in a newly drafted clause for shipping policies that paying a toll to Iran directly or via any of its agents is illegal. If ships pay the toll, it can void the ship’s entire insurance policy.

“Under the clause, insurers have no liability to indemnify any such payment and, where such a payment has been made, are discharged from obligations in respect of the relevant vessel,” LMA said in a statement.

LMA said insurers can apply a blanket policy about tolls so agents don’t need to figure out who is ultimately getting the money in the end.

That could include the United States, after President Donald Trump briefly suggested the country could also impose tolls before abandoning that plan.

But LMA’s clause is just guidance, and agents and shipping companies can draft policies as they see fit.

That could nevertheless significantly complicate an already convoluted situation in the Strait of Hormuz - Iran has fired on vessels that attempt to enter or exit the Persian Gulf by hugging the Omani coast.

Iran wants ships to transit the strait close to its coast so it can register them and impose tolls.

-CNN