Chubb to lead $20 billion Maritime Reinsurance Plan to resume Gulf shipping amid conflict
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Insurance provider Chubb will lead the US International Development Finance Corporation’s (DFC) $20 billion Maritime Reinsurance Plan. This plan aims to help restart commercial shipping in the Gulf as regional tensions rise.
Ben Black, CEO, DFC, said, “DFC is pleased to partner with Chubb, one of the world’s leading insurance companies, to help get energy and trade flowing again through the Strait of Hormuz. DFC’s Maritime Reinsurance plan combines Chubb’s premier underwriting expertise with the financial commitment of the U.S. Government. With today’s announcement, we are one step closer to restoring market confidence and resuming energy and commercial trade disrupted by the conflict with Iran.”
Context: Disruption in the Strait of Hormuz
The recent intensification of the U.S.-Israeli conflict with Iran has severely disrupted shipping traffic through the Strait of Hormuz, a critical global chokepoint responsible for approximately one-fifth of the world’s oil supply.
Iran’s recent attacks on merchant ships and threats of oil prices reaching $200 a barrel have heightened concerns over energy supply stability.
Despite assurances from US President Donald Trump that the campaign will conclude soon, no immediate resolution or safe passage for vessels has been established.
Importance of maritime insurance in conflict zones
Maritime insurance protects ships and cargo against risks such as accidents, piracy, and conflict. Shipowners pay premiums that fluctuate based on assessed risk levels. Standard policies typically do not include war-risk coverage. They have to be purchased separately at higher premiums for vessels navigating conflict zones.
Without adequate war-risk insurance, ships and cargo valued at hundreds of millions of dollars face exposure to potential losses from attacks or seizures. This problem discourages ships from going to high-risk areas, making global trade and energy supply disruptions even worse.
Details of the Maritime Reinsurance Plan
The DFC’s reinsurance facility will cover losses up to $20 billion, offering revolving insurance for eligible vessels. This ensures that coverage is targeted and sustainable over time.
Initially, the insurance will focus on Hull & Machinery and Cargo, addressing the primary risks faced by vessels operating in the conflict-affected Gulf region.
The plan seeks to increase market capacity by engaging multiple American insurance companies to provide reinsurance policies that support Chubb and work alongside the DFC.
Evan Greenberg, Chairman and CEO of Chubb, said, “Chubb is proud to lead and manage this program in partnership with the United States Government and the U.S. International Development Finance Corporation. The commerce passing through the Strait of Hormuz plays a vital role in the global economy, and providing vessels with insurance protection is essential for resuming trade flows.”
This initiative aims to rebuild trust among shipowners and financiers, promote commercial shipping in the Gulf, and reduce the risk of global energy supply disruptions.