Big Promise, No Delivery: Inside Trump’s $40 Billion Hormuz Transit Insurance Scheme

Big Promise, No Delivery: Inside Trump’s $40 Billion Hormuz Transit Insurance Scheme Published By, Last Updated: May 18, 2026, 19:26 IST Major insurers, including Chubb and AIG, were brought on board by the US government to provide insurance coverage for vessels navigating the region. Rapid Read Under the broader “Project Freedom” initiative, the US military reportedly escorted two ships through the Strait in early May. (Photo: AFP file) As global trade faced mounting disruption in the strategically crucial Strait of Hormuz following the Iran conflict, US President Donald Trump announced a massive USD 40 billion insurance programme in March aimed at protecting ships transporting crude oil and other commodities through the volatile waterway. The scheme was projected as a major intervention to stabilise maritime trade and bring down soaring oil prices. Major insurers, including Chubb and AIG, were brought on board by the US government to provide insurance coverage for vessels navigating the region. However, several weeks later, the programme has effectively failed to take off. The insurance facility has not been used even once despite war-risk insurance premiums remaining several times higher than pre-conflict levels, New York Times reported, citing people familiar with the matter. Also Read | Trump’s Approval Ratings Hit New Low Ahead Of Midterms As Iran War Hurts Americans’ Pockets Insurance brokers and industry officials said the scheme was tied to a key condition — US naval escorts for commercial vessels transiting the strait — which has yet to materialise on a meaningful scale. The programme is being managed by the US International Development Finance Corporation (DFC), which described the initiative as a mechanism to provide “political risk insurance and guarantees" for maritime trade, especially energy shipments passing through the Gulf. Under the broader “Project Freedom" initiative, the US military reportedly escorted two ships through the Strait in early May. But beyond those isolated cases, merchant vessels have largely continued to navigate the route without US naval protection. A spokesperson for Chubb said the programme’s purpose was specifically to insure ships operating under naval escort and noted that “there has been no escort". Industry experts said the absence of military protection has discouraged shipowners from participating. Marcus Baker, head of marine insurance at global broker Marsh McLennan, said the resumption of normal trade flows depended on whether shipowners considered conditions safe enough for their vessels and crews. Ellis Morley, a marine broker at Howden, said insurance availability itself was not the primary concern. Instead, the biggest deterrent remained the physical threat to crews, ships and cargoes operating in the conflict zone. According to the International Maritime Organization, at least 38 ships have been attacked or struck since the conflict began, while 11 seafarers have been killed. Shipping through the Strait has increasingly relied on bilateral diplomatic arrangements with Iran or payments allegedly demanded by the Islamic Revolutionary Guard Corps (IRGC). At the same time, the US has continued restrictions on Iranian-linked vessels and ships that have docked at Iranian ports. A DFC spokesperson said the agency remained in close coordination with the White House and other US departments, adding that the maritime reinsurance facility would provide up to USD 40 billion in coverage “if needed" to support President Trump’s directive to restore maritime trade through the Strait of Hormuz. News18 Newsletter Handpicked stories, in your inbox A newsletter with the best of our journalism submit Location: Washington D.C., United States of America (USA) First Published: May 18, 2026, 19:25 IST News world Big Promise, No Delivery: Inside Trump’s $40 Billion Hormuz Transit Insurance Scheme Disclaimer: Comments reflect users’ views, not News18’s. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy Loading comments...