The U.S. International Development Finance Corporation (DFC) said on Wednesday that insurance company Chubb will serve as the lead partner for its $20 billion Maritime Reinsurance Plan, a program intended to help restart commercial shipping operations in the Gulf.
The announcement comes as the U.S.-Israeli conflict has intensified in recent days and shipping through the Strait of Hormuz - a crucial chokepoint for global oil shipments - has been effectively paralyzed. Iran said the world should be prepared for oil to hit $200 a barrel after its forces attacked merchant vessels in the Gulf on Wednesday, while U.S. President Donald Trump has repeatedly sought to reassure markets that the campaign will conclude soon.
So far there has been no easing of hostilities on the ground and no indication that merchant ships can transit the Strait of Hormuz safely. Roughly a fifth of the world’s oil moves through that narrow passage, raising the prospect of a severe disruption to energy supplies on a scale not seen since the 1970s.
Maritime insurance typically covers vessels and cargo against perils such as accidents, piracy and conflict. Shipowners pay premiums that rise as insurers assess the probability of losses. Standard policies commonly exclude war risk coverage, which must be bought separately and often commands much higher premiums for ships calling in or passing through declared conflict zones. Without that war risk protection, ships and cargos worth hundreds of millions of dollars would be exposed to potential attacks or seizures, increasing the vulnerability of owners and financiers and discouraging voyages through affected waters.
The DFC said its reinsurance facility will provide coverage for losses up to roughly $20 billion on a rolling basis, with the initial focus on hull and cargo insurance. In a statement, the agency said:
"Together, DFC and Chubb have identified several American insurance companies to provide reinsurance policies behind Chubb and alongside DFC to expand market capacity,"
The plan is intended to expand available market capacity so that more vessels can obtain the necessary cover to operate in or near the Gulf despite elevated conflict risks. The DFC noted that policies will be provided via the reinsurance arrangement, which is structured to backstop losses as they occur within the stated facility limit.
The development addresses an immediate bottleneck in maritime risk transfer that has emerged as insurers reassess exposures in response to recent attacks. How the facility will be operationalized in practice - including the timeline for onboarding additional American insurance companies and the precise mechanics of claims handling under the reinsurance program - was not detailed beyond the DFC's statement.
With waterborne energy flows concentrated through the Strait of Hormuz and the persistence of military action in the area, shipping operators, financiers, and energy market participants face ongoing uncertainty about transit safety and insurance availability. The reinsurance plan is a targeted effort to reduce that uncertainty by enlarging the pool of risk-bearing capacity for hull and cargo exposures while the conflict continues.
Summary
The DFC named Chubb lead partner on a $20 billion reinsurance facility to help restart Gulf commercial shipping by insuring hull and cargo losses. The move responds to escalating conflict that has halted traffic through the Strait of Hormuz and raised the prospect of steep energy price moves.