{"database": "openregs", "table": "crs_reports", "rows": [["IN12688", "DFC Shipping Reinsurance Facility: Iran Conflict and Strait of Hormuz", "2026-05-06T04:00:00Z", "2026-05-08T09:08:43Z", "Active", "Posts", "Shayerah I. Akhtar, Nick M. Brown", null, "Background\nIn February 2026, U.S. and Israeli forces initiated military operations against Iran. Iran responded with retaliatory attacks and threats against commercial shipping transiting the Strait of Hormuz, through which more than one-quarter of crude oil and petroleum maritime trade transited to global markets. Hostilities and related developments contributed to a near-stoppage of maritime energy and other commerce through the Strait. \nOn March 3, 2026, President Trump ordered the U.S. International Development Finance Corporation (DFC) \u201cto provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.\u201d He also stated naval escorts could be provided for transiting vessels. \nDFC announced a reinsurance facility on March 6, pledging an unprecedented $20 billion\u2014almost ten-fold larger than any active DFC commitment\u2014to help alleviate the maritime commerce disruptions. DFC indicated further details would be forthcoming. It is unclear if DFC has provided any coverage yet. The facility\u2019s potential consequences for DFC\u2019s strategic focus, operations, and risk profile raise issues for possible congressional oversight.\nDFC announcements indicate a $40 billion facility ($20 billion each from DFC and from private partners), focusing initially on \u201cHull & Machinery and Cargo.\u201d DFC announced seven U.S. insurance partners, naming Chubb, a global property and casualty insurer, as the lead underwriter. Chubb is to \u201cmanage the facility, determine pricing and terms, assume risk, and issue policies\u201d and \u201cmanage all claims.\u201d DFC indicated a forthcoming application portal, meanwhile listing some key applicant information it would require to determine eligibility.\nDFC Background\nDFC is a federal agency that provides political risk insurance (PRI), direct loans, loan guarantees, and equity to promote private investment overseas to advance global development and U.S. foreign policy. DFC\u2019s PRI program aims to cover risk of investment losses due to events such as political violence and expropriation, and includes reinsurance to increase underwriting capacity. DFC in April removed information from its application portal indicating a cap of $1 billion on PRI. \nDFC\u2019s support is subject to statutory parameters, including to prioritize less-developed economies, manage risk, ensure development impact, screen for environmental and social effects, and complement private capital (\u201cadditionality\u201d). In reauthorizing DFC in 2025 (P.L. 119-60, Division H, Title LXXXVII), Congress more than tripled the cap on DFC\u2019s potential exposure to claims and other financial payouts (the maximum contingent liability, MCL) to $205 billion. Congress also, among other things, expanded DFC\u2019s authorities to invest in some upper-middle-income and high-income economies (with high-income support limited to 10% of the total MCL, or $20.5 billion), while prohibiting DFC support in \u201ccountries of concern,\u201d such as Iran and the People\u2019s Republic of China (PRC, or China). \n\nPossible Issues and Options for Congress\nScale of Coverage. At end-2025, DFC\u2019s portfolio exposure was roughly $42 billion (of which about $1 billion was PRI), leaving approximately $160 billion in available financing. The financing that may be needed to address Strait maritime commerce disruptions is unclear. Insurance needs may be as high as $352 billion; major private insurers have reportedly relaunched limited or more costly war risk cover for vessels following initial cancelations when the conflict erupted. Shippers also have been reluctant to put crews in harm\u2019s way regardless of insurance availability. \nDFC could use the origin country, the destination country, the vessel flag, or the shipping entity domicile to classify support for Hormuz-transiting shipments. Most origin countries are high-income economies. DFC\u2019s $20 billion backing, if deployed in full and largely to high-income economies, could preclude DFC from providing other support in high-income countries, given that the facility would comprise as much as 97.6% of DFC\u2019s $20.5 billion high-income cap. The vessel flag, firm domicile, or destination may present additional issues: many of these countries also are high-income (e.g., Singapore) or restricted from DFC support (e.g., the PRC). Congress could \nengage in fact-finding to assess how DFC would determine the facility\u2019s country income designations; \nexamine whether the facility is in tension with DFC\u2019s mandates (e.g., one Member has raised potential PRC gains from the facility);\nassess how the facility may affect DFC\u2019s support for its other priorities; and \nconsider whether, and if so, how to modify DFC funding or authorities to support the facility or other congressional priorities, including seeking information on the utilized scale of the facility.  \nStaffing. DFC\u2019s workforce shrank by 25% in 2025, potentially straining its application review and monitoring capacity. CRS identified $75 million in active DFC reinsurance projects, a small share of DFC\u2019s portfolio. Press releases indicate that DFC, Chubb, and the interagency may each be involved in due diligence for each vessel. Congress may assess: \nDFC\u2019s specific role in the facility, and how DFC and its partners plan to coordinate to minimize potential duplication of efforts; \nto what extent DFC is equipped with staff and expertise to administer the facility; and \nwhether any DFC workforce shortfalls would erode efforts to comply with statutory requirements (e.g., \u201ccountries of concerns\u201d prohibition) and shift aspects of facility administration to the private sector at potentially higher costs.\nRisk. Federal accounting practice subjects some PRI to federal credit rules. DFC may cover PRI claims with corporate reserves or borrowing from Treasury, and the government pledges \u201cthe full faith and credit of the United States of America\u201d for all valid claims. Given the implications of DFC operations for taxpayer liability, Congress could oversee or mandate reporting from DFC and/or the Administration on \nhow DFC will use evidence to assess risk for reinsured vessels;\nthe facility\u2019s effect on DFC\u2019s risk profile; and\napplicability of the Anti-Deficiency Act if expected claims exceed appropriations.\nStatutory Compliance. The planned rapid response nature of the reinsurance facility may raise questions about how DFC has tailored its application requirements. DFC applicants must generally seek private sector financing first and show it is inadequate. The reentry of some major private insurers into the maritime war risk insurance market, as noted above, could limit the additionality of DFC-backed support. DFC also may have to expedite its application and screening process, which can take longer than a year to reach Board approval, for support to be relevant in the conflict.\nMembers may conduct oversight or mandate DFC reporting on\nany assessments about shortcomings in private sector PRI offerings and to what extent DFC support would be \u201cadditional\u201d; \nestimates of reduced property risk to covered vessels, if any, due to planned coordination with U.S. Central Command and the Treasury; \nwhether, and if so, how DFC may expedite consideration of applications, including processes to assess development impact and environmental and social impact; and\ntensions, if any, between the President\u2019s offer of \u201ca very reasonable price\u201d to shippers and DFC\u2019s statutory requirement to \u201cminimize cost\u201d for taxpayers.", "https://www.congress.gov/crs_external_products/IN/PDF/IN12688/IN12688.2.pdf", "https://www.congress.gov/crs_external_products/IN/HTML/IN12688.html"]], "columns": ["id", "title", "publish_date", "update_date", "status", "content_type", "authors", "topics", "summary", "pdf_url", "html_url"], "primary_keys": ["id"], "primary_key_values": ["IN12688"], "units": {}, "query_ms": 0.42896694503724575, "source": "Federal Register API & Regulations.gov API", "source_url": "https://www.federalregister.gov/developers/api/v1", "license": "Public Domain (U.S. Government data)", "license_url": "https://www.regulations.gov/faq"}