The marine insurance industry is experiencing notable changes in pricing and risk management, according to a recent report by Gallagher Specialty. The Q2 2025 Marine Hull & Machinery and War Risks Market Update highlights a shift in the market dynamics that could impact both insurers and clients.
Currently, the hull and machinery segment is softening, particularly in London. Increased competition among insurers for high-quality fleets is giving clients more power when negotiating rates. This is generally a positive sign for buyers, although Gallagher Specialty points out that prices are still not sufficient in some areas.
The report warns that if multiple insurance companies pursue growth at the same time, it could lead to instability in pricing across the market. Insurers are trying to maintain profitability while selectively expanding their portfolios. They often begin by targeting the most attractive segments but may have to broaden their focus to meet growth goals, which can affect overall pricing.
In the first quarter of 2025, there were no significant losses reported, but a collision between the cargo vessel Solong and the tanker Stena Immaculate in March serves as a reminder of the risks involved. The Solong, flagged from Portugal, collided with the Stena Immaculate, which was carrying aviation fuel for the U.S. Air Force. Both vessels caught fire after explosions, leading to the rescue of 36 crew members, though one person remains missing. The captain of the Solong has been charged with gross negligence manslaughter.
Stena Bulk’s CEO praised the crew of the Immaculate for their quick actions that minimized damage to the ship.
Despite improvements in technology reducing the frequency of maritime accidents, Gallagher Specialty noted that rising costs for repairs—driven by increases in steel and labor—are putting pressure on profitability. Without adequate insurance premiums, the hull and machinery segment could face significant financial challenges.
The report also highlights geopolitical risks that affect marine war insurance. Ongoing conflicts in the Middle East and Eastern Europe are disrupting shipping routes and elevating risks. Gallagher Specialty warns that a potential collapse of a fragile ceasefire in Gaza could lead to renewed attacks in the Red Sea, prompting shipowners to reroute their vessels to avoid danger.
In the Black Sea, stalled peace talks between Russia and Ukraine continue to pose threats to shipping, with missile attacks damaging ports and vessels. Additionally, Russia’s “shadow fleet” is still active, using older tankers to bypass sanctions, complicating the insurance landscape.
Piracy remains a concern, with recent hijackings off the coast of East Africa. In March, the Yemeni-flagged vessel AL-HIDAYA was taken off Somalia, adding to the challenges faced by underwriters in assessing risk.
Trade issues are also on the radar, as protectionist measures could hinder global cargo flows and raise risks at ports. The International Union of Marine Insurance (IUMI) has emphasized the importance of technology in improving data analytics and risk management strategies.
As the marine insurance market continues to evolve, stakeholders will need to adapt to these changes to ensure stability and profitability in the face of new challenges.