Saudi Arabia considers establishing a state-backed war insurance program

Al Arabiya – Saudi Arabia is exploring the creation of a state-backed insurance program against war risks, in an effort to lower insurance costs for ships and cargoes as tensions escalate in the region.

According to the Financial Times, the Saudi Ministry of Finance has held talks with insurance brokers in London regarding the establishment of an insurance consortium that could provide commercial coverage of up to 700 million riyals per insured event, such as a ship being targeted by a missile or detained.

Under the proposal, insurance and reinsurance companies would cover the initial layers of risk, while the Saudi Export and Import Bank would provide additional government guarantees worth hundreds of millions of dollars per insured entity.

The move comes after insurance companies have raised their premiums and reduced coverage for ships, infrastructure, and shipments of oil and chemicals in the region, amid the ongoing conflict with Iran and escalating Houthi attacks.