New capacity fueling marine hull and machinery competition, says BMS

By Chris Munro

July 15 - (The Insurer) - The marine hull and machinery market remains competitive with underwriters offering rate reductions to both blue and brown water business provided they have a clean loss history, according to a new report from BMS.

Competition in the sector is rising further owing to increased capacity entering the sector, the broker said in its North American Marine Market Update.

Notably, much of that new capacity is coming from MGAs who, BMS said, “are actively challenging the current marketplace.”

“As we come to the end of 1.7 renewals, it has been clear that there is no reversing of these conditions expected for the second half of 2025, although underwriters will wait to see how this forthcoming hurricane season develops,” BMS said.

Conditions remain the same even as hull and machinery underwriters contend with some notable losses in recent months, including the Wan Hai cargo ship fire and the MSC Elsa 3 capsizing, both off the coast of Kerala, India, along with the sinking of the Midas car carrier off Alaska following a fire onboard.

Despite those casualties, BMS said it does not expect those claims to have an impact on rates in the hull market, mainly because of the increased capacity which continues to drive competition.

PORTS AND TERMINALS CAPACITY INCREASES

In the ports, terminals and marine property sector, BMS said there has been a continued softening, again due to increased competition stemming from new capacity entering the market.

“This new competition is being driven from both within Lloyd’s and externally through the company market and increasing MGA presence, as well as from pre-existing markets who are increasing their capacity on 2025 renewals,” BMS said.

MARINE LIABILTY RATE RISES SLOW

Concern over rising claims inflation and nuclear verdicts means that despite over capacity in the sector, rates are now broadly holding for marine liability business, the broker noted in its report.

“Throughout Q2, we have seen the pace of rate increases gradually slowing with some accounts approaching flat renewals, particularly for desirable, clean risks with shorter stretches,” said BMS.

Excess placements that contain non-marine underlying exposures like auto liability continue to see pricing pressure, with underwriters pushing for moderate rate increases where they can.

However, as BMS noted, there is sufficient capacity for there to be a fluid rating environment that is heavily dependent on the type of coverage sought, along with a risk’s location, the limit desired and the program’s loss histor