US Doubles Maritime Reinsurance to $40 Billion to Maintain Oil Flow Through Strait of Hormuz

The United States has expanded its maritime reinsurance program to $40 billion to ensure the continued flow of oil and goods through the volatile Strait of Hormuz. By doubling the previous $20 billion commitment from the U.S. International Development Finance Corporation (DFC), the initiative aims to restore confidence among shippers amid escalating regional tensions. This move is critical for the marine and shipping sector as it provides essential war risk coverage for vessels and cargo navigating one of the world's most vital energy corridors.

The U.S. International Development Finance Corporation (DFC) has partnered with several major American insurers to double the maritime reinsurance facility from $20 billion to $40 billion on a rolling basis. While the DFC provides $20 billion in coverage, NYSE-listed insurer Chubb will act as the lead underwriter, joined by additional partners including Travelers, Liberty Mutual Insurance, Berkshire Hathaway, AIG, Starr, and CNA. Chubb is tasked with managing the facility, determining pricing and terms, assuming risk, issuing policies, and handling all claims for eligible vessels and cargo.

This reinsurance plan is designed to fulfill a presidential directive to stabilize international commerce and support American and allied businesses operating in the Middle East during the ongoing conflict with Iran. The facility specifically offers war marine risk insurance covering hull and liability, war protection and indemnity (P&I), and war cargo insurance. According to DFC CEO Ben Black, the involvement of these leading American insurers brings deep underwriting experience to the effort, which is intended to mitigate the effects of the energy crisis triggered by the effective closure of the strait.

To participate in the program, applicants must undergo a rigorous vetting process conducted by the DFC and its interagency partners, which includes sanctions and Know Your Customer (KYC) checks. Shippers are required to provide detailed information, such as the vessel's origin and destination, major beneficial owners and their domiciles, cargo ownership details, and information regarding the lenders financing the vessel. The DFC expects to open the application portal soon, providing a structured mechanism for shippers to secure the necessary coverage to navigate high-risk waters while restoring confidence to the global shipping market.