Geopolitical tensions and evolving trade routes are reshaping the landscape for the marine insurance sector, according to industry leaders at the International Union of Marine Insurance (IUMI) conference in Singapore.
IUMI president Frédéric Denèfle (pictured above) opened the event by highlighting the significant changes confronting marine insurers as globalisation trends shift.
Denèfle noted that the sector is approaching what he described as the “end of globalisation,” a development he has addressed at previous conferences but now considers to be at a pivotal stage.
“The end of globalisation is fast approaching,” Denèfle said. “We’ve already witnessed a slowdown in recent years, but post-COVID the trend has accelerated. While some uncertainty over 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 cooperation and peaceful economic growth.”
During his workshop, Denèfle clarified that international trade is not ending but is instead transforming. He said marine insurers must adapt to a new environment where traditional shipping and logistics practices are being disrupted.
“The global trade environment is no longer moving toward seamless integration. Instead, fragmentation is taking hold, creating new challenges and new opportunities for risk assessment, underwriting and innovation,” he said.
Denèfle pointed to several factors already impacting the sector. Vessels are rerouting to avoid high-risk areas, resulting in longer and more expensive journeys. There is also a potential revival of inland transport and nearshoring, as well as rising goods prices that may contribute to inflation. Supply chains are being reorganised, which requires investment in new infrastructure.
Additionally, the sector is seeing greater reliance on artificial intelligence, alternative trade corridors, and emerging markets.
The marine insurance market is also contending with increased risks linked to the aging global fleet. More than half of all marine casualties in 2024 involved vessels over 20 years old, and industry data shows a 42% rise in casualty incidents between 2018 and 2024.
This trend is contributing to a notable rise in high-value claims, with seventeen Pool claims exceeding US$10 million reported to the International Group in 2024, and costs tripling compared to the same point over the previous two years.
Another emerging risk is the growing frequency of fires aboard car carriers, particularly those transporting electric vehicles (EVs). These incidents are challenging for insurers due to the tightly packed configurations of car carriers and the unique hazards posed by lithium-ion batteries.
The ongoing conflict in the Red Sea has further compounded risk profiles for marine insurers. Coverage costs for vessels transiting this region have risen sharply, with war risk premium rates reaching as high as 1% of a ship’s value – up from 0.4% earlier in the year.
For a vessel valued at US$100 million, this translates to a premium of up to US$1 million, significantly affecting operating margins and influencing routing decisions for global shipping companies.
Despite these challenges, Denèfle described the marine insurance market as stable. “Financial ratings are strong, and trust in insurers remains high,” he said.
He acknowledged that a sharp downturn in international trade could affect global premium volumes, potentially requiring a reassessment of business plans and underwriting strategies. However, he maintained that the sector is showing resilience.
“Marine insurers have always adapted to change — and this period will be no different. What we are facing is not the end of global trade but the beginning of a new era. To succeed, we must understand these shifts fully, embrace innovation and continue building trust and resilience into everything we do,” Denèfle said.
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