Chubb outlined the structure of the new $20 billion maritime reinsurance facility, created to provide marine war risk insurance for ships sailing through t
he Strait of Hormuz — which has been effectively closed to shipping since the start of the war with Iran.
The maritime insurance facility was created by the U.S. government via the U.S. International Development Finance Corp. (DFC), which on March
11 announced Chubb as lead underwriter for its $20 billion reinsurance plan.
Originally, the DFC program was focused on hull & machinery and cargo — but Chubb announced that it has been expanded to include liability.
Moody’s said recently that exclusion of liability would be a deal-killer for most shipowners moving crude oil through the Strait of Hormuz, due to the m
assive risk of pollution liability and cleanup if a vessel was hit by a mine or drone.
A Moody’s representative said additional details about this incarnation of the DF
C program are not yet available and therefore the ratings agency wouldn’t comment. A Lloyd’s spokesperson also would not comment on the program
. The International Underwriting Association (IUA), which represents the London company market, was not available to comment.
Chubb listed the details of the facility, which include:
Chubb, acting as lead underwriter, will manage the facility, determine pricing a
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nd terms, assume risk, and issue policies for eligible vessels and cargo. Chubb will also manage all claims.
The initiative is a public-
private partnership between DFC, Chubb, and other name-brand American insurance companies who will act as reinsurers. “Participating insu
rers bring deep underwriting experience in marine and marine war coverage,” said C
hubb. (Editor’s note: It is unclear whether Lloyd’s and the London market could participate in the program as reinsurers).
DFC will help coordinate the co
nsortium of American reinsurers and set certain criteria for ships accessing the progr
am. (Editor’s note: AIG did not respond to a query about the requirements neede
d to access the cover).
The facility will provide war marine risk insurance for hull & liability as well as cargo
. Coverage will be offered for war hull risk insurance, for war P&I insurance and war cargo insurance.
The offering w
ill apply to vessels that meet eligibility criteria provided by the U.S. government.
This insurance
will be available to ships transiting the Strait of Hormuz and only under certain cond
itions.
The additional American insurance companies will be disclosed in the coming days.
