The Trump administration has increased its maritime insurance support to $40 billion. This move aims to kickstart commercial shipping through the Strait of Hormuz, despite shipowners mostly staying away. The U.S. Inter...
The Trump administration has increased its maritime insurance support to $40 billion. This move aims to kickstart commercial shipping through the Strait of Hormuz, despite shipowners mostly staying away.
The U.S. International Development Finance Corporation (DFC) and Chubb Limited shared on Friday that six more U.S. insurers—Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr Companies, and CNA Financial—have joined the Maritime Reinsurance facility. They contributed an additional $20 billion on top of the initial commitment made by the DFC.
This decision comes less than a month after Washington launched the first $20 billion program. The effort was initiated after missile and drone attacks, coupled with many insurers pulling out, significantly reduced vessel traffic through the Strait.
However, even with this quick expansion, there is little sign that the facility is being utilized. Industry sources indicate that no confirmed users of the DFC-backed insurance program have emerged so far, even as the government seeks to enhance it.
A major reason for this is that the insurance gap the program was meant to fill has, at least partially, been closed. While war-risk insurance is now more expensive, it has returned on a voyage-by-voyage basis, allowing shipowners to get coverage without needing the federal support.
The original U.S. strategy was based on the idea that insurance withdrawals were the main issue stopping ships from passing through Hormuz. However, over a month into the crisis, operators seem to be more worried about physical risks than financial coverage.