$40 Billion in U.S. Insurance Capacity Can't Lure Ships Back Through Hormuz

A month into the Hormuz shipping crisis, Washington's flagship financial tool for restarting commercial vessel traffic has failed to move the market — and the gap between the program's ambition and its uptake is growing wider.

The U.S. International Development Finance Corporation and Chubb Limited announced on April 4 that six additional U.S. insurers — Travelers, Liberty Mutual, Berkshire Hathaway, AIG, Starr Companies, and CNA Financial — had joined the Maritime Reinsurance Facility, bringing total capacity to $40 billion. Chubb will act as lead underwriter, issuing policies and managing claims across war hull, liability (P&I), and cargo coverage lines.

The program was originally conceived as a response to the mass withdrawal of war risk underwriters that occurred in the first days of the crisis, when premiums for Hormuz transits jumped from 0.125% of ship value to between 0.2% and 0.4% — an increase of approximately $250,000 per transit for a very large crude carrier. At those levels, the thinking in Washington was that financial coverage had become the primary barrier.

That diagnosis has since been challenged by the market itself. War risk cover, while still significantly elevated, has returned on a voyage-by-voyage basis from specialist underwriters at Lloyd's and the Singapore and Nordic markets. The insurance gap, at least partially, has closed — not because of the federal backstop, but through the return of appetite at higher premiums.

According to industry sources cited by gCaptain, there have been no confirmed takers on the DFC-backed facility as of early April. Shipowners and operators, when surveyed informally, consistently identify physical risk — missile strikes, drone attacks, electronic interference, and unpredictable IRGC behavior — as the real obstacle to resuming transits. The absence of any naval escort program has compounded that view. U.S. officials have raised the possibility of military convoy support, but no programme has materialised.

The scale of the disruption reinforces the point. Traffic through the strait remains near zero: Iran has recorded at least 21 confirmed attacks on merchant ships since February 28, with 12 seafarers killed or missing, 16 vessels damaged, and seven abandoned. Brent crude, which peaked at $126 per barrel in mid-March, has softened slightly but remains well above pre-crisis levels.

The war risk premium trajectory tells a nuanced story. Pre-crisis, the baseline was 0.125% of hull value per voyage. That rose sharply to 0.2–0.4% in the first weeks before some markets temporarily withdrew entirely. Today, cover is available on a voyage-by-voyage basis from residual markets at premiums estimated at 10–16 times the pre-crisis level by some brokers — accessible in theory, but not sufficient to offset the perceived physical exposure for crew and vessel.

For P&I clubs, the picture is slightly different. The International Group clubs have not formally excluded Hormuz, but several have issued enhanced due-diligence requirements for Gulf port calls. Club circulars have reminded members that war risk cover sits outside standard P&I and that operators must ensure separate war risk hull cover before committing to a transit — a procedural addition that increases the pre-voyage checklist without fully blocking movement.

What this means for operators: The federal backstop's failure to attract takers is a signal that the market has already priced the financial risk of Hormuz transits — the ceiling is high, but the capacity exists. The constraining factor is crew safety and physical vessel exposure, for which no amount of insurance provides an operational answer. Operators looking for a pathway back to Gulf trades should focus on the emerging Oman corridor, neutral-flag diplomatic exemptions, and IMO's ongoing effort to establish a humanitarian passage framework — not on whether Washington has added another line of reinsurance capacity.