Kathmandu. To ensure the continued flow of commercial shipping from the Strait of Hormuz, the United States has launched a $20 billion government-supported maritime reinsurance program. U.S. insurer Chubb has been selected as the lead U.S. insurer for the program.
The announcement was made by the United States International Development Finance Corporation (DFC). Chubb will serve as a key partner and principal underwriter of the new marine reinsurance plan.
This initiative is designed to ensure insurance protection for commercial shipments due to the increasing risk related to war in the Persian Gulf region. The program will provide a government financial backstop for damage to ships’ hulls and machinery, cargo and other war-related maritime risks.
In recent years, the threat of missile and drone attacks has increased in the Middle East. As a result, the coverage capacity in the private insurance market has been significantly reduced. The program, created by presidential order and administered by the U.S. Treasury Department and U.S. Central Command, will provide coverage of up to $20 billion on a rotating basis.
The Strait of Hormuz is one of the most important waterways for global energy trade. About 20% of the world’s oil shipments pass through it. However, recent security tensions have reduced ship traffic on the route.
Under this program, SAB will issue policies to eligible ships as a major insurance company. Other U.S. insurers with reinsurance capacity will also participate in this arrangement.
According to DFC, Chubb’s experience in marine and political risk insurance and financial support from the U.S. government will help stabilize insurance availability for shipping companies. Premiums for war risk have risen sharply in recent weeks. Many insurance companies have limited their risk or increased premiums. This has hampered maritime trade.
Evan Greenberg, president and CEO of Chubb, said commercial shipping via the Strait of Hormuz is critical to global energy supply. “This initiative will help improve shipping safety and restore trust between shipowners and insurance companies,” he said.
U.S. officials hope the reinsurance backstop and increased security measures in the region will gradually resume ships carrying oil, gasoline, LNG and jet fuel. –Agency
