The US says the $20 billion war-risk reinsurance scheme aims to restore confidence in trade through the Strait of Hormuz during tensions with Iran. File Image / Pixabay

The US International Development Finance Corporation (DFC) and the US Treasury Department have agreed on an implementation plan to deploy maritime reinsurance, including war-risk cover, for vessels operating in the Gulf region.

The plan, approved by US President Donald Trump, was announced by DFC CEO Ben Black and Secretary of the Treasury Scott Bessent, DFC said in a statement on its website on Friday.

According to the announcement, the initiative will be implemented in coordination with the United States Central Command (CENTCOM) and is intended to restore confidence in maritime trade and stabilise international commerce during the ongoing conflict with Iran.

The reinsurance facility will cover losses of up to about $20 billion on a rolling basis and will apply only to vessels that meet specific eligibility criteria.

Initially, the programme will focus on hull & machinery and cargo insurance, providing additional protection for ships transiting the region.

The US government said the plan forms part of a broader effort to safeguard global trade flows, particularly shipments of oil, gasoline, LNG, jet fuel and fertiliser passing through the Strait of Hormuz.

“We are confident that our reinsurance plan will get oil, gasoline, LNG, jet fuel, and fertilizer through the Strait of Hormuz and flowing again to the world,” Black said.

DFC said it has identified preferred American insurance partners and will provide further details as implementation progresses.

Maritime insurance firms such as Gard have already stopped giving war risk insurance cover for ships operating for vessels operating in the region.