Marine insurers are facing significant change in the way global trade moves in the year ahead, according to International Union of Marine Insurance (IUMI), even though premium income has risen slightly in the past year.
News from the marine insurance market came thick and fast at the recent IUMI annual conference in Singapore where marine insurers, including a large contingent from Africa, met to discuss the latest state of play.
Overall, the mood was cautiously optimistic despite some strong warnings about changes ahead. Marine insurers were told in no uncertain terms that artificial intelligence (AI) is set to transform the marine insurance sector, with Rahul Khanna, chair of IUMI’s data and digitalisation forum, emphasising the rapid pace of technological change.
“As an industry, we need to keep pace with this change or we run the risk of being left behind. If we don’t get onboard with this new technology now, it might be too late. In five years’ time, our workspace is going to look very different,” he predicted.
But it was not just internal factors at play. IUMI president Frédéric Denèfle has warned of the deepening shifts in global trade — something he says has now reached a critical turning point. “The end of globalisation is fast approaching,” he said.
“We’ve already witnessed a slowdown in recent years, but post-Covid the trend has accelerated. While some uncertainty around US tariffs has eased, escalating trade tensions and regional conflicts are reshaping the foundations of international commerce. Conflicts in Ukraine/Russia and the Red Sea are a stark reminder that hard national interests are taking precedence over international co-operation and peaceful economic growth.”
He reassured the market that the changing environment does not signal the end of international trade, but rather a mutation into a new era — one that marine insurers must understand.
“Traditional shipping and logistics practices are being disrupted,” he said. “The global trade environment is no longer moving towards seamless integration. Instead, fragmentation is taking hold, creating new challenges and new opportunities for risk assessment, underwriting and innovation.”
According to Denèfle, this change was already making itself known in a number of ways including:
- Vessels avoiding high-risk regions and using longer, costlier routes.
- A possible resurgence of inland transport and nearshoring.
- Rising goods prices and subsequent effects on inflation.
- Reorganisation of cross-border supply chains, requiring investment in new shore-side infrastructure.
- Increased reliance on artificial intelligence, alternative trade corridors and emerging markets.
Despite these potential shifts, Denèfle struck an optimistic tone, emphasising the marine insurance sector’s robustness and enduring relevance.
“Financial ratings are strong, and trust in insurers remains high. Of course, a sharp downturn in international trade could affect global premium volumes, meaning we would need to revisit business plans and underwriting policies. But for now, our sector is demonstrating remarkable resilience.”
Marine insurance performance
Meanwhile, the global marine insurance premium base for 2024 was reported as US$39.92 billion, representing a 1.5% increase on the previous year. Global income was split by region: Europe 46.96%, Asia/Pacific 29.79%, Latin America 10.19%, North America 7.75%, Middle East 3.53% and Africa 1.38%.
By line of business, the largest share was commanded by transport/cargo at 57.23% followed by global hull 23.51%, offshore energy 11.71% and marine liability (other than P&I covered by IG clubs) 7.55%.
IUMI’s chief analyst, Veith Huesmann said: “Changes in premium income tend to stem from a rise in global trade (for cargo) coupled with increases in vessel values (for hull) or an uptick in the oil price encouraging more activity in the offshore energy sector, although this hasn’t been the case in 2024. Geopolitical instability will impact specific regions, of course. Added to this, general market conditions, specifically capacity, will also have an effect and 2024 saw more capacity enter all markets.
“The other side of the coin is the claims environment which continues to be relatively benign and this has translated into a good performance — in terms of loss ratios — for the hull and cargo business lines. However, the perennial challenges of ever-larger vessels, net-zero, mis-declared cargoes, accumulations, vessel fires and high-risk zones remain.”
Cargo dominance
Cargo continues to dominate global marine insurance premiums, accounting for $22.64 billion in 2024, an uplift of 1.6% from last year. Premiums are largely driven by global trade activity as well as movements in asset and commodity prices. The oil price in particular plays a dual role: it is both a key product and a major source of revenue, influencing both cargo and offshore energy insurance.
Cargo premiums remain heavily influenced by the Chinese market, which is being driven by e-commerce and return-insurance schemes. Europe (37.68%), traditionally the leading cargo market, is now experiencing a slight decline, while Asia/Pacific (35.15%) continues to rise. As a result, the gap between the two markets is narrowing.
Loss ratios for cargo have been improving steadily since 2018, which is encouraging new capacity into the market. In 2023 and 2024, Europe reported exceptionally low loss ratios, while Latin America remained at an average of 40%-50%. In the US, a small number of companies reported poor results, pushing the brown water market average to around 50%-60%.
An absence of any major catastrophic loss in 2024, coupled with containable attritional losses, have contributed to a stable cargo market. However, the impact of the current economic and political uncertainties is yet to be seen.
Ocean hull
The ocean hull sector reported global premiums of $9.67 billion, representing a 3.5% increase from the previous year. The dominance of the European hull market (52.91%) over other regions remains significant and the gap between Europe and Asia continues to widen.
Several European countries reported notable premium growth in 2024 partly strongly influenced by swinging exchange rates: Turkey recorded an increase of more than 30%, the Nordics reported a stable 5% rise and Russia – which is included in the European reporting – announced growth of 15% as a consequence of imposed sanctions. In Asia, China reported 9% growth in hull premiums. However, the overall trend for Asia over the past year has flattened, with Chinese performance partly compensating for weaker results in other Asian markets such as India, Singapore and Japan. This can be explained by the fact that many newbuilds delivered from China are typically insured locally.
In Europe, the average loss ratio has remained relatively stable at around 60%-65% since 2021. Cost inflation, deductible structures and premium developments continue to shape these figures.
New capacity in the hull market is also having an impact, not only for the core product but also for auxiliary covers such as loss of hire. Geopolitical tensions, which force re-routing of global trade, are temporarily relieving supply-side constraints.
The ageing of the global fleet presents additional challenges. Delayed scrapping leads to older tonnage remaining in service which, in turn, raises the frequency of machinery claims. Fires on car carriers and container vessels also continue to be a major issue for hull and cargo insurers. Emerging factors such as the introduction of alternative fuels, new technologies such as 3D-printed spare parts present fresh underwriting challenges. Growing inflation of costs further contributes to higher probabilities of constructive total losses.
Offshore energy
Global premiums in the offshore energy market were reported as $4.34 billion in 2024; a 7.9% reduction compared to 2023. This market continues to suffer from a prolonged soft cycle, now in its fifth to sixth year. The decline in 2024 European premium figures is mainly due to non-renewals and reduced new business in the UK. Volumes reported by markets such as Japan, Malaysia and Egypt show a stable to downward trend.
The Nordic market shows resilience and reported a 27% increase while Nigeria stood out with a 40% decline due to removal of petrol subsidies, liberalisation of the foreign exchange market and change of fixed to floating exchange rates by the Central Bank. While 2024 saw no major claims, attritional losses remain the main concern. Oil prices are showing signs of stabilising at around US$60-$70 per barrel as OPEC+ begins to unwind its voluntary production cuts of 2.2 million barrels/day in six instead of 18 months.
Stable outlook
Jun Lin, chair of the IUMI Facts & Figures Committee, said: “The marine insurance sector is relatively stable but faces some strong headwinds, with geopolitical and trade tensions creating an unprecedented level of uncertainty across global trade. While growth in seaborne trade has slowed — partly due to tariffs and a normalisation following the extraordinary demand surge in 2024 — it is encouraging to see growth in cleaner fuel volumes outpacing those of fossil fuels.
“While tariffs are having an impact, put in context, they are currently affecting less than 4% of global trade,” he said.
Lin explained that interest rates globally have already started to fall and the consequent reduction in inflation will likely impact overall profitability for most insurers. Similarly, he added, the weakening US dollar will squeeze top line premium income and add to claims costs for those insurers paying out in non-US-dollar currencies.
Lin continued: “At the same time, an ageing global fleet presents growing challenges, from machinery failures to increased maintenance demands and seafarer wellbeing. Claims were relatively benign in 2023 and 2024 but this year has seen an uptick, particularly in groundings, large vessel fires and, of course, war-related losses.
“The relatively weak oil price continues to impact offshore energy prices and, consequently, insurance premiums. There has been a substantial pullback in capex spend, particularly in the Middle East. We’ve also seen a dip in investment in offshore wind projects in 2024, but spend is expected to pick up this year and over the coming years.”
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