Saudi Arabia Establishes War-Risk Insurance Pool to Protect Trade Flows

Saudi Arabia is establishing a national insurance mechanism to help protect cargo and vessels from war-related risks and keep trade moving as geopolitical tensions increase across the region.

The Saudi Cabinet approved the creation of the Saudi War Risks Insurance Pool for Cargo and Vessels, aimed at strengthening domestic insurance capacity and helping businesses manage rising costs and difficulties in obtaining coverage during periods of heightened maritime risk.

The initiative comes as disruption to global trade increasingly extends beyond closed ports or blocked shipping routes. Higher insurance premiums, reduced coverage and tighter underwriting conditions can make some voyages too expensive to operate.

Saudi Finance Minister Mohammed Al-Jadaan described the marine insurance pool as a specialised national mechanism designed to support trade and supply-chain continuity through a public-private partnership.

He said the initiative would strengthen the technical capabilities of Saudi Arabia’s insurance market and increase its ability to provide necessary coverage under frameworks established by the Insurance Authority. The mechanism is also intended to strengthen economic resilience during regional and international crises.

The pool is particularly relevant as Saudi Arabia seeks to expand its position as a regional logistics and trade hub. Industry experts say companies consider insurance costs and the ability to manage unexpected risks alongside port charges, transport expenses and cargo-handling costs when choosing distribution and re-export locations.

Logistics specialist Nashmi Al-Harbi said shipping risks in the Red Sea and Gulf had prompted some insurers to tighten coverage conditions for vessels operating in the region.

He said the Saudi pool could provide greater certainty for domestic transport and logistics companies, while international businesses moving cargo through Saudi ports could also benefit from a more stable insurance environment.

Supply chain expert Khalid Al-Ghamdi said the initiative could help companies plan voyages, negotiate contracts and set prices with greater confidence by reducing uncertainty over insurance expenses.

The Insurance Authority has outlined four main objectives for the pool: increasing the domestic insurance market’s ability to absorb marine risks, supporting trade and supply-chain continuity, reducing the impact of global reinsurance volatility and strengthening Saudi Arabia’s position as a logistics hub.

Coverage will include cargo transported by land, sea and air, along with marine hull insurance for covered damage and risks. The scheme will also provide charterers’ liability and protection and indemnity coverage.

Eligible beneficiaries include importers and exporters, vessel owners and operators, shipping and freight companies, maritime transport businesses, logistics and supply-chain companies, and participating Saudi insurers.

Saudi Re has been selected by the Insurance Authority to lead and structure the pool’s arrangements. The company will manage its technical operations and reinsurance arrangements, while participating insurers will provide coverage to eligible customers under approved terms.

The initiative follows similar efforts in other countries. India recently established a $1.5 billion marine insurance pool, backed by a $1.4 billion sovereign guarantee, to cover war risks involving vessels and cargo connected to Indian interests.

The development reflects a broader shift toward national mechanisms designed to keep maritime trade operating when global insurers raise premiums or reduce their willingness to cover risks in conflict-affected regions.