Marine hull rates soften in 2025: Gallagher

By Michael Jones

April 14 - (The Insurer) - Increased competition for the most desirable fleets has created a more favourable rating environment for buyers of marine hull and machinery cover in the early months of 2025, Gallagher Specialty said in a report on Monday.

• H&M market sees gradual rate softening, more acute in London

• Claims inflation impacts machinery breakdown costs, Gallagher says

• Black Sea additional premiums highest due to sanctions, Red Sea risks persist

The broker said 2025 has seen an expected gradual softening in H&M rates which had been most acutely felt in the London market.

Attempts from multiple large participants to grow simultaneously have created challenges for the market, Gallagher said.

“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”, the broker said.

The market’s loss experience has improved due to a lower frequency of accidents, which the broker said was driven by improvements in safety standards, automation and technology.

However, Gallagher said claims inflation has seen the cost of regular machinery breakdown claims soar, while increased steel, labour and yard space prices have directly impacted overall loss ratios.

Gallagher said the Black Sea and Red Sea remain high-risk areas for transiting vessels.

"Additional premiums for Black Sea voyages remain the highest in the marine war market as sanctions on vessels and cargos, particularly Russian oil/petroleum products, grow increasingly stringent" the broker said.

There also remains "no certainty" that vessels will enjoy safe passage through the Red Sea, Gallagher said. Despite U.S. strikes on the Houthis, the broker said war risk insurers must act with strict precaution and await long-term evidence of a change in risk before committing to any major changes to terms and exposure.