As Iran chokes Strait of Hormuz, U.S. vows $20B for maritime reinsurance
Global News
The U.S. says it has stuck a new agreement to provide up to US$20 billion in reinsurance coverage to 'restore confidence in maritime trade' amid the Iran war.
The U.S. says it has struck a new agreement to provide up to US$20 billion in reinsurance coverage to “restore confidence in maritime trade” amid the Iran war in the volatile Gulf Region.
This comes days after Iran effectively closed the Strait of Hormuz by threatening virtually all ships that try to pass through the narrow choke point between the Persian and Oman gulfs, which sees about 20 per cent of the world’s oil, and other crucial goods, passing through.
On Friday, the U.S. International Development Finance Corporation (DFC), along with U.S. Treasury Secretary Scott Bessent, announced an agreement approved by U.S. President Donald Trump to deploy what it calls “Maritime Reinsurance” in the Gulf region, according to a statement.
Trump said on Tuesday that he was moving to provide financial insurance along with possible military support for maritime trade.
The DFC adds that this agreement includes “war risk.”
“I am grateful to President Trump and Secretary Bessent for their support and approval of DFC’s plan to restore confidence in maritime trade and stabilize international markets,” DFC CEO Ben Black said in the statement.
Shortly after the conflict began, many insurance companies raised their policy rates for businesses because of the risk in the region amid the conflict. If rates get too high, those businesses may cancel their plans because they can’t afford the necessary insurance coverage.
Reinsurance is essentially insurance for the insurance providers.
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