Saudi Arabia has held talks with London brokers about a state-backed war and political risk insurance scheme for ships, according to people familiar with the discussions, as conflict threatens the kingdom’s trade routes and energy exports.
The talks follow months of sharper marine insurance pricing and tighter cover for vessels, infrastructure and cargo, including oil and chemicals. Insurers have repriced exposure around the Iran war and the Houthis’ escalating campaign against Saudi Arabia.
In some cases, underwriters have refused to sell war cover to ships planning voyages through major chokepoints. The Red Sea has become more important for Saudi trade, with Yanbu taking on greater weight in oil exports after reduced shipping through the Strait of Hormuz.
The Saudi Ministry of Finance has explored a plan that would let ships and marine cargo assets obtain cheaper cover through an insurance pool, people familiar with the talks said. The pool would offer as much as SAR 700 mn ($186 mn) in commercial cover for each insured event, such as a vessel seizure or missile strike.
Commercial insurers and reinsurers would provide the first layers of cover. Hundreds of mn more $ would then sit behind each insured entity through a backstop from the state-owned Saudi Export-Import Bank, the people said.
One version discussed would have Saudi Re and Riyadh Re lead a group of participating reinsurers. International reinsurers would also be eligible to join.
The Saudi Insurance Authority, Exim Bank, Saudi Re and Riyadh Re did not respond to requests for comment.
The talks remain active, including over terms and the amount of risk the Saudi government would take. The people said the discussions still might end without an agreement.
The Saudi talks come after a separate effort announced earlier this year by US President Donald Trump to subsidise insurance for ships seeking to transit the Strait of Hormuz.
That facility secured backing from Chubb and AIG and aimed to provide as much as $40 bn in cover. Months after launch, it had not written any cover, the Financial Times previously reported.
Underwriters have grown more cautious toward ships linked to Saudi Arabia after attacks by Yemen’s Houthi rebels. They now treat some of those vessels more like high-risk Israeli and US-linked assets.
Ships in the Persian Gulf and Red Sea now face some of the highest marine war-risk insurance costs in years, as underwriters reprice cover around Iranian attacks, Houthi threats and weaker appetite for spot voyages.
Persian Gulf war-risk pricing has returned to decade-high levels. Insurers quote 3% to 6% of a ship’s value, compared with a normal peacetime rate near 0.25%
Governments usually set up insurance pools after large losses or continuing threats make commercial insurance too expensive or unavailable for companies. The UK created a state-backed terrorism reinsurance scheme after the IRA bombing campaign. The US created a similar structure after the September 11, 2001 attacks in New York.
The Saudi scheme under discussion would seek to lower insurance costs and give shipowners and other companies broader cover, including war, political violence and terrorism. Those risks often sit in separate policies, which leaves gaps when attacks blur legal categories.
“Cover is certainly still attainable in the region, I don’t see this as a market in crisis,” said Maximilian Hess, founder of political risk consultancy Enmetena Advisory. He said a pool would help keep insurance available at commercial rates that do not damage project economics or final investment decisions.
“The lines between direct war and direct terrorism in the region are blurred,” Hess said. “Are the Houthi attacks a war incident or terror? To ensure that you’re adequately covered now, you might want broader coverage.”
According to Beinsure analysts, the Saudi proposal shows how marine war-risk insurance has moved from a voyage-cost issue into a state trade-security problem.
When insurers restrict cover at chokepoints, governments often step in because freight, oil exports and project finance start to feel the squeeze.
For shipowners, the pool would offer cheaper and broader protection if the structure reaches market. For reinsurers, the harder question sits in the Saudi state backstop, pricing discipline and how claims would flow after an attack tied to a proxy group rather than a formal state military.
