Tail risks are now the central concern for insurers after attacks on Iranian and Qatari gasfields sent markets into turmoil. The Financial Times reports that the bombings highlight the expanding scope of the conflict, forcing insurers to grapple with low-probability, high-impact events threatening energy supplies and global growth. Strait of Hormuz transit has plummeted to just 105 ships since the war began, brokers say, as insurance costs for Gulf routes have surged fivefold or more due to heightened Solvency II capital requirements in Europe. This creates a financial squeeze, making it uneconomical for many ship owners to operate.

While Lloyd's of London previously dominated maritime insurance, cancellations of Gulf contracts followed the conflict. Trump's administration proposes a $20bn US Development Finance Corporation (DFC) insurance scheme, but JPMorgan calculates the market needs $352bn of coverage. The DFC's limited mandate and funding gap mean it offers only a partial solution, potentially forcing a shift towards strategic hoarding and higher inflation, analysts warn.

This crisis underscores how Trump's geoeconomic interventions clash with European actuarial rigor. The DFC's rise as a foreign policy tool, despite Trump's cuts to USAID, reveals a fundamental tension: can the administration's approach to tail risk effectively replace the complex, privately-backed insurance ecosystem? The answer remains unclear, but the stranded ships signal a significant shift in global trade dynamics.