The International Development Finance Corporation (IDFC) together with the US Treasury Department are launching a reinsurance program for ships in the Persian Gulf to restore stability to maritime transport in the region. The total insurance coverage is expected to be about $20 billion.
The DFC statement notes that the initiative is intended to restore confidence in international maritime trade and support businesses operating in the Middle East amid the escalating conflict with Iran.
“This plan will restore confidence in maritime trade, help stabilize international trade, and support American and related businesses operating in the Middle East during the conflict with Iran,” the statement said.
The program provides for insurance only for those vessels that meet the established requirements. In the first stage, it will cover insurance of the hull and machinery of vessels against physical damage (Hull & Machinery). DFC has engaged leading insurance companies, most of which are based in the United States, to implement the project.
The corporation’s CEO, Ben Black, believes that such an initiative will help ensure the stability of transportation of oil, liquefied natural gas, fertilizers and other goods through the Strait of Hormuz in the face of a tense situation in the region.
“I am grateful to President Trump and Secretary Bessant for their support and approval of DFC’s plan to restore confidence in maritime trade and stabilize international markets. Working together with CENTCOM, DFC’s coverage will provide a level of security that no other policy can provide. We are confident that our reinsurance plan will receive oil, gasoline, LNG, jet fuel and fertilizers through the Strait of Hormuz,” Black said.
US Treasury Secretary Scott Bessant noted that after the aggravation of the situation in the Middle East, insurance companies have effectively stopped insuring ships passing through the Strait of Hormuz. That is why the DFC has launched a new program that should restore confidence in maritime transportation.
According to Bessant, the Trump administration is also considering the possibility of escorting merchant ships by US Navy ships while passing through the Strait of Hormuz. It is expected that such measures could be implemented in the coming weeks.
“What this program will do is provide insurance to shippers, regardless of whether they are transporting oil, products, fertilizers… We will wait for an answer from CENTCOM in terms of when they believe safe passage will be possible. I don’t know if it is a week or two, but we are on the way to resolving this issue,” he stressed.
