Saudi Arabia is pushing to introduce a "marine war risk insurance" system in which the state partially guarantees loss risks to safeguard its oil export routes.

According to the Financial Times (FT) of the UK on the 23rd (local time), the Saudi government recently met with British insurance industry officials to discuss introducing marine war risk insurance, where the state shares part of insurers' loss risks during wartime and political crises.

Under this scheme, insurers would jointly form an "insurance pool" to reduce the premium burden on vessels, guaranteeing payouts of up to $186 million per accident—approximately 231.5 billion won—in the event of actual accidents such as vessel seizure or missile attacks.

Primary coverage would be handled by private insurers and reinsurers, while the state-owned Saudi Export-Import Bank would activate a "backstop" (loss-absorption mechanism) to provide hundreds of millions of dollars in additional funding if damages exceed a certain threshold.

The exact scale of the Saudi government's risk-sharing remains under discussion, according to reports.

One source added that depending on the negotiations, there is still a possibility that both sides may fail to reach a final agreement.

Recently, Saudi Arabia has faced major disruptions to its oil exports due to tensions in the Strait of Hormuz stemming from wars involving the U.S., Israel, and Iran, as well as threats in the Red Sea by Yemen's Iran-backed Houthi rebels.

Insurers have begun classifying Saudi-linked vessels as high-risk assets—equivalent to U.S. and Israeli assets—and have drastically hiked insurance premiums for Saudi ships and cargo or restricted related coverage.

Some insurers are even refusing to sell marine war risk insurance altogether in ports such as Yanbu on the Red Sea, which emerged as a key Saudi export hub after navigation through the Strait of Hormuz became restricted, the FT reported.

There are precedents where governments stepped in directly to establish insurance pools when political crises made it difficult for businesses to access insurance.

The British insurance industry and government introduced an insurance pool in 1993 to prepare for terrorism by the Irish Republican Army (IRA), and the United States operated a similar system following the September 11 terrorist attacks in 2001.

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