The global marine insurance sector is undergoing a shift in pricing dynamics and risk exposure, as outlined in Gallagher Specialty’s latest Q2 2025 Marine Hull & Machinery and War Risks Market Update.
According to the report, the hull and machinery segment has entered a softening phase, especially in London, where intensified competition among insurers for top-tier fleets is giving insureds greater leverage. This trend is creating a rate environment more favourable to buyers, although Gallagher Specialty emphasised that pricing remains technically insufficient in certain areas.
“While technical rating is still, in many cases, insufficient, there is some discipline remaining in the market as underwriters try to retain profitability while selectively growing their portfolios,” the brokerage said in the report.
Gallagher Specialty warned that if multiple carriers chase growth simultaneously, it could trigger a market-wide decline in pricing stability.
“Underwriters initially look to grow in the most desirable segments but then quickly have to look elsewhere to meet ambitious growth targets. This has a knock-on effect on ratings across the market,” it said.
Gallagher Specialty indicated that while the first quarter of 2025 was largely free of major losses, the collision between the general cargo vessel Solong and the tanker Stena Immaculate off the coast of East Yorkshire in March served as a stark reminder of the potential for severe incidents.
The Solong, a Portuguese-flagged vessel, struck the anchored Stena Immaculate, which was carrying aviation fuel under charter by the US Air Force. Both ships caught fire following explosions, and while 36 people were rescued, one person remains unaccounted for. Authorities from the UK, Portugal, and the U.S. launched an investigation. The captain of the Solong was charged with gross negligence manslaughter several days later.
Stena Bulk CEO Erik Hånell credited the Immaculate’s crew with activating boundary cooling systems before abandoning ship, an action he said minimised broader damage to the vessel’s cargo tanks.
While the overall frequency of marine casualties has declined due to technological improvements, Gallagher Specialty’s report highlighted that repair cost inflation is weighing on profitability. Rising prices for steel, labour, and shipyard capacity have increased claim severity, especially for machinery breakdowns.
The brokerage noted that without adequate premiums, the H&M line risks slipping into an unprofitable position.
The report also assessed geopolitical risks affecting marine war risk cover. Ongoing conflict in the Middle East and Eastern Europe continues to disrupt shipping patterns and elevate exposure.
Gallagher Specialty warned that the collapse of a fragile ceasefire in Gaza may lead to renewed Houthi attacks in the Red Sea. Despite US airstrikes aimed at degrading their capabilities, the threat level remains high for vessels transiting the region, prompting many shipowners to divert traffic via longer routes around the Cape of Good Hope.
In the Black Sea, peace negotiations between Russia and Ukraine remain stalled, and the brokerage cited missile attacks on ports such as Odesa that damaged multiple vessels and resulted in fatalities. The Black Sea remains a significant concern for insurers, with potential losses tied to trade disruptions and sanctions.
Additionally, the brokerage noted the continued activity of Russia’s so-called “shadow fleet” – aging tankers used to bypass Western sanctions by concealing ownership and frequently switching registries. These vessels are thought to transport a majority of Russia’s crude exports under the radar of international regulations.
Gallagher Specialty also reported new incidents of piracy in the waters off East Africa.
In March, the Yemeni-flagged AL-HIDAYA was hijacked off Somalia, following similar events in February. The persistence of such attacks adds another layer of complexity for risk underwriters.
Focusing on trade issues facing the marine insurance industry, the International Union of Marine Insurance (IUMI) addressed the market’s exposure to trade tariffs during an executive meeting in February.
IUMI secretary general Lars Lange warned that protectionist trade measures could constrain global cargo flows, elevate risk accumulations at ports, and affect insurable values.
The organisation also discussed the role of technology in marine insurance, highlighting improvements in data analytics and digital risk modelling. These innovations are shaping loss prevention strategies and claims management, according to IUMI.
