Trump has a plan — but shipowners aren’t convinced: US President Donald Trump announced a plan for the US Navy to escort tankers through Hormuz, as well as for the US Development Finance Corporation to provide state-backed war-risk ins. The move is intended to ensure energy flows, but has been met with skepticism and confusion by global shipowners and insurers.

The US deployed a maritime reinsurance initiative –– including war risk –– which will insure losses of up to USD 20 bn “on a rolling basis” on vessels, according to a statement released on Friday. The move aims to restabilize the flow of energy and commercial trade in the Gulf as oil prices surge. For now, the coverage will focus on hull, machinery, and cargo.

Let’s break it down: The owners of ships currently stuck in the Arabian Gulf have said that naval escorts would not persuade them to transit while combat operations continue. Protecting the high volume of tankers transiting the region is viewed as impractical, as it would require a massive deployment of warships and military assets.

Why this matters

Where do we stand? War risk premiums for vessels transiting the Red Sea and Gulf of Aden surged –– hitting as much as 1000% in some cases. With at least nine ships already damaged, tension remains high and total losses from the damaged vessels are forecasted to be at USD 1.75 bn.

The new ins. rate of 3% would suggest a hull war risk premium of around USD 7.5 mn –– up some 0.25% or USD 625k, before the conflict launched last week, analysts at Jefferies estimate. While other analysts set the ratings between 1% and 1.5% of vessel value, as the “rate spectrum is wide and varied depending on many factors, including whether the vessel is east or west of the Hormuz chokepoint,” UK-based firm Marsh VP Dylan Mortimer said.

Maritime specialists remain skeptical: “No one in the Gulf has any details on how [Trump’s] plan will work,” Amena Bakr, Kpler head energy research at data and analytics wrote on X, noting that, “Our experts don’t think Trump’s vessel escort idea will work as vessels will be heavily exposed to Iranian missiles. And even if they do manage to escort the vessels the cost will be too high.”

Shipbrokers aren’t convinced: "Ins. doesn't make the hull impervious to rockets," shipbroker Odin head petroleum and tanker analyst Alpman Ilker said. "Ins. may incentivize a few to start transiting but the Iranians will likely attack and then traffic will again cease transit."

And neither are shipping associations: “Providing protection for all tankers operating in areas currently threatened by Iran is unrealistic as this would require a very high number of warships and other military assets,” Bimco said.

In the ins. market, coverage remains available — for now: The London ins. market is “willing and able,” to cover ships looking to transit the strait, broker Arthur J Gallagher & Co and Lloyd’s Market Association said on Thursday. With the majority of these vessels already insured in the London market.

Still, uncertainty remains around the US backstop: London-based insurers have yet to incorporate the proposed US backing into the war-risk market, citing uncertainty over how the scheme would function in practice.

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