Softening Ocean Hull Insurance Market Faces Growing Risks Amidst Rising Premiums

The ocean hull insurance market is witnessing a return to a softer environment, despite a notable increase in premiums. Ilias P. Tsakiris, chair of the International Union of Marine Insurance (IUMI) ocean hull committee, shared insights at the organization's annual conference in Singapore, where he noted a 3.5% rise in global hull premiums for 2024, totaling approximately USD 9.67 billion. However, this statistical growth belies a more complex reality; the underlying risk landscape is becoming increasingly fraught with challenges stemming from an aging fleet, geopolitical upheaval, and the intricacies of the energy transition.

The global fleet's value has surged by 4% to an estimated USD 1.54 trillion, with Europe contributing 53% of premiums, followed by Asia Pacific at 35%, and other regions at 12%. This concentration creates fierce competition in key markets, heightening vulnerability in the event of a catastrophic loss.

While losses have not dramatically surged in terms of headline figures, loss ratios are under pressure. The combination of rising costs, more complex incidents, and an aging fleet that poses repair challenges has intensified the scrutiny on insurers.

The average age of the global fleet stands at 22.6 years, with around 35% of vessels exceeding 25 years old and 61% older than 15 years. This aging trend is particularly concerning, as vessels 20 years or older accounted for over half of all reported incidents in 2024, underscoring the aging fleet as a significant, albeit understated, driver of claims. As new ships enter the market, only 16% of the existing fleet is represented in the order book for replacements, while scrapping rates remain at multi-year lows.

The energy transition further complicates the risk profile for marine insurers. Of the 3,466 newbuilding orders for 2024, about 25% are designed to operate on alternative fuels, a figure that has risen to 31% for orders placed in 2025.

Tsakiris emphasizes that these novel fuels—methanol, ammonia, and hydrogen—bring entirely new hazard profiles into the insurance equation. Insurers will need to navigate the complexities of more sophisticated machinery with limited repair histories, all while the average age of the fleet continues to rise.

Geopolitical factors add another layer of complexity to the marine insurance landscape. The ongoing conflict between Ukraine and Russia, alongside security issues in the Red Sea, has necessitated rerouting through the Cape of Good Hope, leading to increased transit times and exposure to adverse weather conditions.

This escalation has been linked to engine failures, weather damage, and soaring salvage costs. Moreover, sanctions impacting the tanker market have contributed to the emergence of a shadow fleet, which now constitutes approximately 17% of the global fleet. Tsakiris cautions that while war premiums are elevated, managing the accumulation of risk has become increasingly challenging, compounded by the human toll of detentions, kidnappings, and crew abandonments.

In a parallel session, the IUMI's data digitalization forum highlighted the transformative potential of artificial intelligence in marine insurance. Chair Rahul Khanna advocated for the ethical implementation of this rapidly advancing technology, suggesting that it could significantly reshape the industry's future. As the ocean hull insurance market navigates these turbulent waters, it faces the dual challenge of adapting to new risks while embracing the opportunities presented by technological advancements.