Many people in the global maritime industry have been left utterly confused by Donald Trump’s pledge to provide “political risk” insurance guarantees for ships travelling through the Gulf, leading Maltese maritime lawyer Ann Fenech said.

Dr Fenech, who is the President of Comité Maritime International and who heads the maritime litigation department at Fenech & Fenech, spoke to WhosWho.mt from South Africa, where she is attending an international maritime law conference, during which there was a lot of talk about the insurance situation for the thousands of ships caught in the Gulf.

“Most ships are already covered by a war risk insurance policy, but what tends to happen is that if a war breaks out while they are trading, their hull and machinery insurers would issue a cancellation of that existing war risks policy,” she explained.

“The purpose of such a cancellation wouldn’t be to invalidate the policy but to leave it valid for a few days, during which they would renegotiate the premium for the particular zone in which the war has broken out.”

Many ships are currently in the process of renegotiating their war-risk insurance policies, at a higher premium to reflect the higher level of risk.

This is solely for their Hull & Machinery insurance, which covers damage to a ship’s hull and equipment and is separate from the third-party Protection & Indemnity (P&I) insurance that covers the cargo on board.

“It’s a very worrying situation,” Dr Fenech said. “Shipowners are concerned for their vessels and crew, but they also have obligations with their financiers. Their banking packages include an obligation for their insurance to be in order, and if they don’t obtain a proper war risk policy, they will be in default of their financial obligations.”

US President Donald Trump - photo/Facebook

In the midst of this situation, President Trump announced on Truth Social that he has ordered the US Development Finance Corporation to “provide, at a very reasonable price, political risk guarantees for the financial security of all maritime trade, especially energy, travelling through the Gulf.”

He added that the US Navy would escort tankers through the Strait of Hormuz if necessary to ensure the free flow of energy.

However, this statement has confused many experts in the industry.

“Political risk is a different ball game; it covers things like the risk of political upheaval but not war, which is covered by war-risk policies,” Dr Fenech said.

“I’ve spent the past hour and a half debating with maritime experts around the world and no one can understand what he means by political risk in the context of war.”

“War risks policies exist and current insurers and underwriters are renewing them, but what Trump means is a big question mark in this context.”

She said that maritime experts expect the President or one of his aides to clarify exactly what the US is offering.