In light of ongoing and active hostilities in Iran and the surrounding region since February 28, 2026, owners, operators and charterers and traders of vessels operating in and around the Strait of Hormuz should be aware of the following developments:

Major insurers have issued notices of cancellation with respect to war risk insurance coverage for vessels in the region: Beginning March 1, 2026, a number of major industry insurers have issued notices of cancellation with respect to war risk insurance coverage for vessels traveling through the Persian Gulf, Gulf of Oman and Strait of Hormuz.
President Trump has ordered the United States International Development Finance Corporation (DFC) to make insurance available to protect affected maritime trade: In response to the above notices, President Trump announced via a Truth Social post on March 3, 2026, that he had ordered the DFC, which describes itself as the “international investment arm of the US government,” to provide “political risk insurance and guarantees” for maritime trade traveling through “the Gulf.”
DFC has announced plan to provide insurance covering losses of up to US$20 billion: On March 6, 2026, the DFC announced a US$20 billion plan “to deploy Maritime Reinsurance, including war risk, in the Gulf region,” noting that businesses and financial institutions seeking to access the DFC’s Insurance and Guaranty products should contact the DFC directly at maritime@dfc.gov. On March 11, 2026, the DFC also announced that they had chosen the lead insurance partner for the Maritime Reinsurance plan.

Background on the DFC and budgetary considerations

The DFC is a wholly owned US government corporation established under the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act). The stated purpose of the BUILD Act was to consolidate the functions of the Overseas Private Investment Corporation (OPIC) and the Development Credit Authority of the US Agency for International Development (USAID) into a single federal agency. Through the consolidation of OPIC and USAID, the DFC serves as the US’ primary development finance institution, facilitating investment in foreign markets to support US foreign policy objectives.

The Board of Directors is composed of both government and non-government members including a Chief Executive Officer, appointed by the President with the advice and consent of the Senate. The eight currently sitting members of the Board of Directors for the DFC are as follows: 

Ben Black, Chief Executive Officer
Marco Rubio, Secretary of State, US Department of State
Eric Ueland, PTDO Administrator, US Agency for International Development
Scott Bessent, Secretary of the Treasury, US Department of the Treasury
Howard Lutnick, Secretary of Commerce, US Department of Commerce
Irving W. Bailey II, Senior Advisor, Chrysalis Ventures
Christopher P. Vincze, Chairman and CEO, TRC Companies, Inc.
Deven Parekh, Managing Director, Insight Partners

The Board is responsible for setting DFC policy, implementing statutory requirements and advancing executive priorities, particularly with respect to the President’s foreign affairs powers under Article II of the US Constitution.

Pursuant to the BUILD Act, the DFC is authorized to provide direct loans, loan guarantees, equity investments and insurance, with such insurance backed by the full faith and credit of the US government. With respect to insurance, the BUILD Act broadly authorizes the DFC to “issue insurance or reinsurance, upon such terms and conditions as the [DFC] may determine, to private sector entities and qualifying sovereign entities assuring protection of their investments in whole or in part against any or all political risks such as currency inconvertibility and transfer restrictions, expropriation, war, terrorism, civil disturbance, breach of contract, or non-honoring of financial obligations.”

One consideration regarding the announced insurance program is budgetary constraints, as all DFC-backed projects must be evaluated by the DFC for “economic and financial soundness and development objectives” and the DFC must notify certain congressional committees regarding any financial commitment exceeding US$100 million (though congressional approval is notably not required).2 More significantly, as the DFC must operate within DFC’s congressionally approved maximum contingent liability, which is currently US$250 billion through 2031. Industry commentators have observed that such fiscal constraints may materially affect the scale of coverage the DFC is able to provide.

President Trump orders DFC to insure maritime trade in affected areas

On March 3, 2026, President Trump announced that he had ordered the DFC to provide “political risk insurance and guarantees” for maritime trade traveling through “the Gulf,” although the announcement did not precisely specify which areas “the Gulf” is referring to. On the same day, the DFC put out a media release noting it was “ready to mobilize its Political Risk Insurance and Guaranty products” in accordance with these orders.

On March 6, 2026, the DFC made an additional announcement, providing more specific details on such an initiative, announcing a DFC maritime reinsurance facility which “will insure losses up to approximately US$20 billion on a rolling basis” launched in coordination with the US Central Command and the US Department of the Treasury. The announcement noted the insurance will “focus on Hull & Machinery and Cargo to start” and “apply only to vessels that meet the criteria,” though the specifics of such “criteria” have yet to be announced.

On March 11, 2026, the DFC further announced its selection of a leading international insurer “as the lead underwriter issuing policies for eligible vessels.”

Though exact details remain to be seen, both the President’s announcement and the DFC’s releases note the coverage would be available to protect all marine shipping in the “Gulf” or “Gulf Region,” with a particular emphasis placed on ensuring the security of energy trade.

Generally, the Political Risk Insurance offered by the DFC provides coverage of up to US$1 billion against losses due to:

Currency inconvertibility
Expropriation
Political violence
Arbitral award default
Denial of recourse
Non-honoring of sovereign financial obligations

The DFC’s “political violence” coverage, in particular, generally protects against income and asset losses caused by:

Declared or undeclared war
Hostile actions by national or international forces
Revolution, insurrection and civil strife
Terrorism and sabotage

In addition to the above, the DFC notes that “political violence” coverage is available to cover:

evacuation expenses,
income losses resulting from temporary abandonment of a project caused by political violence and
income losses resulting from damage to specific sites outside the insured facility, such as a critical railway spur, power station or supplier.

Beyond insurance coverage, the President’s announcement further noted that “[i]f necessary, the US Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.”

The DFC releases state that affected businesses and financial institutions seeking to access DFC’s Insurance and Guaranty products or DFC’s Maritime Reinsurance product should contact DFC directly at maritime@dfc.gov.