A U.S. Navy frigate passes an oil tanker in the Strait of Hormuz, the route covered by the Chubb DFC war-risk insurance facility

Chubb Leads $40 Billion U.S. War-Risk Insurance Plan for the Strait of Hormuz

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At a glance: the deal

  • Size: up to about $40 billion in war-risk insurance capacity on a rolling basis, with $20 billion from the U.S. International Development Finance Corporation (DFC) and $20 billion from Chubb and six other U.S. insurers.
  • Lead underwriter: Chubb, which sets pricing and terms, takes on risk, issues policies and handles all claims.
  • Key dates: ordered by President Trump on March 3, 2026; announced by DFC on March 6; Chubb named lead partner on March 11; enlarged to $40 billion on April 3. No end date has been published. The facility is described as available for the duration of the conflict and “if needed.”
  • Coverage: war hull, war protection and indemnity (P&I), and war cargo insurance for eligible ships moving through the Strait of Hormuz.
  • Impact so far: limited. Chubb said in April that the program would start only once U.S. Navy convoys run, and trade press reported in May and June that no policies had been placed. Before the war, the extra war-risk premium on a Gulf trip was about 0.15% to 0.25% of a ship’s hull value. During the fighting, quotes reached 5% to 10%.

Chubb, the world’s largest publicly traded property and casualty insurer, is the lead underwriter and manager of the U.S. government-backed maritime war-risk insurance facility for the Strait of Hormuz. DFC and Chubb set up the program in March 2026 after attacks on shipping during the U.S.-Israeli war with Iran brought traffic through the strait almost to a halt. Since then, the facility has grown to $40 billion. Seven months on, the main question for shipowners is not whether the cover exists but when it will be switched on.

How the Chubb DFC Hormuz insurance facility works

On March 3, President Trump directed DFC to provide “political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf,” according to a Congressional Research Service (CRS) brief. On March 6, DFC pledged $20 billion. CRS called the sum “unprecedented” and said it was almost ten times larger than any active DFC commitment.

On March 11, DFC named Chubb as lead partner. In a March 20 release, Chubb said it would “manage the facility, determine pricing and terms, assume risk, and issue policies for eligible vessels and cargo,” and would manage all claims. DFC coordinates the group of reinsurers and sets the ship eligibility rules together with other federal agencies.

On April 3, DFC and Chubb added six more U.S. insurers as reinsurers: Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr and CNA. Those insurers and Chubb together put up $20 billion alongside DFC’s $20 billion, which brought the facility to about $40 billion. Applicants have to disclose the vessel’s name, IMO number, flag, owners and their home countries, crew details, the cargo’s value and owner, and the vessel’s lenders.

Why the facility has written little or no business

On Chubb’s April 22 earnings call, Chairman and CEO Evan Greenberg said the program was tied to U.S. naval escorts. “The government wanted to support shipping through the Gulf when they think that the risk environment is such that they can support military convoys for ships,” he said, according to The Maritime Executive. “And that has yet to occur.” He also said DFC carries half of the risk and the insurer group carries the other half.

Insurance Business reported later that the facility had “written zero business.” It also reported that only two ships had been guided through the strait in early May under a short-lived U.S. effort. CRS raised further questions for Congress. It noted that DFC’s staff shrank by 25% in 2025 and that the facility could use up as much as 97.6% of DFC’s $20.5 billion cap for high-income countries. CRS also pointed out that DFC is generally supposed to step in only when private cover falls short, while major private insurers had already returned to the market with limited or pricier cover.

Shipping traffic has partly recovered without the facility. Lloyd’s List Intelligence counted 477 transits by vessels not linked to Iran in September, the most since the conflict began, USNI News reported. Lloyd’s List also counted 12 attacks on ships between Sept. 28 and Oct. 7, the highest weekly total of the war.

War-risk premiums before and after the war

Insurance Day reported that before the late-February strikes, the extra premium for a trip into the Middle East Gulf usually ran from 0.15% to 0.25% of hull value, and that rates had been softening. Within days, the new benchmark became 1%, with triple rates for ships linked to the U.S., the U.K. or Israel. Hormuz transits later cost 2.5% in most cases and 5% for ships with those links. A Lloyd’s List briefing on April 10 said premiums had peaked at 5% to 10% of hull value per voyage at the height of the fighting.

For a tanker insured at $100 million, the jump from 0.25% to 5% means the war-risk premium for one voyage rises from about $250,000 to $5 million. That figure is an illustration based on the reported rates, not a quoted policy. In comments reported by Canadian Underwriter, one market specialist put recent hull war quotes at 7.5% to 10%. A trade analysis of the London market said Hormuz rates were raised again after a ceasefire broke down this summer.

Who was the largest Gulf shipping insurer before the war?

The sources reviewed do not name a single company as the largest insurer of Gulf or Hormuz shipping before the war. What they describe is a market led by London. Lloyd’s of London is a marketplace of many syndicates rather than one insurer. It writes an estimated 70% to 80% of the world’s marine war-risk business, gCaptain reported. Rates for Gulf transits were set mainly by Lloyd’s syndicates and London company-market insurers.

The Joint War Committee is made up of underwriters from the Lloyd’s Market Association and the International Underwriting Association. It publishes the “Listed Areas,” where shipowners must notify their insurers before a voyage. It does not set prices. Before the war, those areas already included Iran, Iraqi offshore oil terminals, Oman, the United Arab Emirates and parts of Saudi Arabia. After the strikes began, the committee added waters around Bahrain, Djibouti, Kuwait, Oman and Qatar, Reuters reported. Liability cover came mainly from protection and indemnity clubs, which are mutual associations of shipowners. Reports said the clubs issued war-risk cancellation notices for the Gulf when their own reinsurance backing was pulled.

The Lloyd’s Market Association disputed claims that cover had disappeared. In a market statement it said reports suggesting that insurance was “cancelled or unaffordable” and that this was why ships were not transiting the strait were “not accurate.” A survey of its members found that 88% were still willing to write hull war risks.

The Boston Report has also covered recent Strait of Hormuz maritime incidents, rising shipping costs between the U.S. and Asia, and the IMF’s Middle East growth forecast.

Reactions

“Chubb is proud to lead and manage this program in partnership with the United States Government,” Greenberg said in DFC’s announcement. “The commerce passing through the Strait of Hormuz plays a vital role in the global economy.” On the earnings call, he said Chubb had joined “to support our country and to support our military” and “to support the global commons and the economy.”

DFC CEO Ben Black said the plan “combines Chubb’s premier underwriting expertise with the financial commitment of the U.S. Government.” A DFC spokesperson later told Insurance Business that, “if needed,” the facility will provide $40 billion of coverage. Lloyd’s Market Association CEO Sheila Cameron welcomed DFC’s involvement, gCaptain reported.

Photo: A U.S. Navy frigate passes a tanker after transiting the Strait of Hormuz during Operation Desert Shield. U.S. Department of Defense, public domain, via Wikimedia Commons.

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