The Trump administration unveiled a $20 billion reinsurance program designed to jump-start shipping through the Strait of Hormuz, where traffic has nearly ground to a halt amid U.S. and Israeli strikes on Iran.
The U.S. International Development Finance Corp. said Friday it is rolling out maritime reinsurance — including war-risk coverage — in the Persian Gulf to help stabilize commercial shipping. The facility will cover losses of up to about $20 billion on a rolling basis and, for now, will apply only to vessels, according to a statement.
The move comes just days after President Donald Trump directed the DFC to offer insurance “at a very reasonable price” to keep energy supplies and other commercial trade moving through the Gulf as oil prices surge. His remarks followed warnings from several governments, including the U.S., that a lack of insurance coverage was hindering ships from transiting the region. Trump also said the U.S. military could escort vessels through the Strait, though no formal plans have been announced.
The strait handles roughly a fifth of the world’s oil shipments, along with large volumes of gas, fertilizer, and other goods. But Iran has threatened to target vessels attempting to pass through the waterway, helping drive a sharp surge in global oil and fuel prices.
“DFC and Treasury are coordinating closely with CENTCOM on next steps in the implementation of this plan,” the development agency said, referring to the US military’s Central Command.
The DFC said it has identified “best-in-class, preferred American insurance partners.”
Even before the DFC’s announcement, private insurers were still offering coverage for ships planning to sail through the region. The Lloyd’s Market Association said Thursday that quotes were continuing to be issued, while broker Arthur J. Gallagher & Co. noted that the London insurance market remains willing and able to insure vessels transiting the strait.
Insurers have already shown interest in partnering with the agency to provide the reinsurance, according to a DFC official. The program’s structure, the official said, was shaped by extensive discussions with the insurance industry.
Private insurance coverage alone hasn’t been enough to persuade ships to sail through the Strait of Hormuz. Shipowners say the real concern is the safety of crews asked to enter what has effectively become a war zone.
The DFC said it is working with U.S. Central Command, but Treasury Secretary Scott Bessent said Friday afternoon he still doesn’t know whether U.S. naval escorts will be needed in the Gulf.
Photograph: An Iranian supertanker; photo credit: Jorge Guerrero/AFP/Getty Images
