Chubb to serve as lead US insurer for Gulf shipping amid Iran war

WASHINGTON : Insurance Giant Chubb (CB.BN), opens new tab will be the lead partner on the U.S. International Development Finance Corporation‘s $20 billion Maritime Reinsurance ​Plan aimed at resuming commercial shipping in the Gulf, the ‌agency said on Wednesday. The U.S.-Israeli conflict with Iran has widened sharply in recent days and paralyzed shipping traffic through the Strait of Hormuz, a major global chokepoint in the Gulf.

Iran said ​the world should be prepared for oil to hit $200 a barrel ​as its forces attacked merchant ships on Wednesday in the ⁠blockaded Gulf. Meanwhile, U.S. President Donald Trump has repeatedly tried to reassure ​markets this week that the campaign will end soon.

So far there has ​been no let-up on the ground and no sign ships can safely pass through the Strait of Hormuz, where about a fifth of the world’s oil passes, ​raising the risk of the worst disruption to energy supplies since the ​oil shocks of the 1970s.

Maritime insurance covers ships and cargo against risks such as ‌accidents, ⁠piracy or conflict, with shipowners paying premiums that rise as insurers assess the likelihood of losses.

War-risk coverage is typically excluded from standard policies and must be purchased separately, often at sharply higher premiums for vessels sailing through ​conflict zones.

Without such ​coverage, ships and ⁠cargo worth hundreds of millions of dollars would be exposed to losses from attacks or seizures, leaving owners ​and financiers vulnerable and deterring vessels from sailing through ​such ⁠waters.

The DFC said its reinsurance facility will insure losses up to roughly $20 billion on a rolling basis and insurance will initially focus on hull and ⁠cargo. 

“Together, ​DFC and Chubb have identified several American ​insurance companies to provide reinsurance policies behind Chubb and alongside DFC to expand market capacity,” the ​agency added.