Chubb Backing Trump’s $20 Billion Reinsurance Plan for Hormuz

Chubb Ltd. is partnering with the U.S. International Development Finance Corp. on a $20 billion reinsurance backstop aimed at reviving shipping in the Strait of Hormuz, a crucial oil route being disrupted by the U.S. and Israeli war with Iran.

The firm will underwrite and issue policies for eligible vessels, the DFC said in a statement Wednesday, as part of the Trump administration’s new initiative to offer maritime reinsurance. While Chubb is the lead partner, other participating insurers could be announced in coming days.

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“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,” Chubb Chief Executive Officer Evan Greenberg said in the statement.

Shipping through the strait — which carries about a fifth of global oil flows, as well as gas, fertilizer and other products — has effectively ground to a halt since the U.S. and Israel launched the war against Iran on Feb. 28.

Related: Lloyd’s Market Engaging With US on Gulf Maritime Plan, Officials Say

While the Lloyd’s Market Association has said insurance for ships in the region is still available, maritime cover premiums have spiked as Iran threatens to target vessels crossing the passage.

Last week, the DFC said it was deploying a reinsurance program to cover losses of as much as $20 billion on hull, machinery and cargo damage. The little-known agency, which was traditionally responsible for development lending abroad, has taken on a bigger role in national security under the Trump administration.

“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,” DFC CEO Ben Black said in the statement announcing the Chubb partnership.

Top photo: Cargo ships in the Strait of Hormuz in February. Photographer: Giuseppe Cacace/AFP/Getty Images. Bloomberg.