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The Lloyd’s of London market is engaged in discussions with the US International Development Finance Corporation over the provision of political risk insurance and related guarantees to support vessels operating in the Gulf. A Lloyd’s spokesperson said, “Lloyd’s is engaging constructively with the US Development Finance Corporation and relevant stakeholders.” The talks center on preserving the London market’s role as the global leader in war risk insurance amid heightened regional tensions.
The US International Development Finance Corporation announced its readiness to deploy such products on March 3, 2026, under directives from President Trump to back American and allied businesses during the conflict with Iran. A follow-up DFC statement on March 6 outlined a 20 billion dollar reinsurance facility focused initially on hull, machinery, cargo and war risks for qualifying ships. The DFC later expanded the facility to 40 billion dollars after bringing in additional partners including Chubb as the lead underwriter along with AIG and Liberty Mutual, according to subsequent DFC releases.
The US Energy Information Administration data shows the Strait of Hormuz accounts for nearly one-fifth of global oil shipments, making uninterrupted maritime traffic through the Gulf a key factor in worldwide energy supply. Insurance costs for vessels in the area have risen sharply with war risk premiums climbing from 0.25 percent to 0.5 percent of insured value in some cases, adding hundreds of thousands of dollars to the expense of a single voyage for large carriers. The DFC initiative aims to reduce those financial pressures and help maintain the flow of commerce and energy exports.
Most ships transiting the Gulf continue to obtain their primary coverage through the London market despite the challenges, a pattern that Lloyd’s List reporting highlighted in its coverage of the US plan. The Lloyd’s Market Association welcomed the DFC’s intention to facilitate movement of non-sanctioned vessels while stressing that existing insurance arrangements largely remain intact. Industry assessments place Lloyd’s as the dominant provider for such marine war risks worldwide.
Mordor Intelligence projected the global political risk insurance market to grow from 36.81 billion dollars in 2026 to 49.01 billion dollars by 2031 at a compound annual rate of 5.89 percent. The Gulf reinsurance effort illustrates closer ties between government development agencies and specialist insurers to address geopolitical exposures in critical trade corridors. Coordination with US Central Command forms part of the DFC framework to align coverage with security provisions in the region.
Eligibility for the facility is limited to vessels and operators meeting criteria that were still being refined in early March, a DFC assessment found. The program extends support directly to shipowners, charterers and key insurance providers to limit disruptions from the Iranian regime’s actions. Implementation of the reinsurance backstop has proceeded on a rolling basis with claims capacity calibrated to sustain market confidence through the period of instability.
