Geopolitical headwinds may offset decline in total marine losses: Allianz

May 27 - (The Insurer) - Despite global shipping losses hitting a record low in 2024, the maritime sector is facing rising insurance risks associated with war, aging vessels and the increasing shadow fleet, according to Allianz Commercial’s Safety and Shipping Review 2025.

• Main cause of total loss in 2024 was foundered vessels

• Allianz has settled "several" total losses for war risk claims

• Protectionist tariffs and politicisation of shipping 'choke points' to shape shipping sector going forward

• Underinsured shadow fleet continues to threaten maritime safety

In its latest review, Allianz said just 27 vessels were lost last year, down from over 100 a decade ago. The South China, Indochina, Indonesia and the Philippines region had the most loss activity globally over the past year. followed by the British Isles and the East Mediterranean and Black Sea

Foundered was the main cause of total loss across all vessel types, accounting for close to half. This was followed by fire/explosion, which accounted for seven total losses.

Allianz noted that while traditional risks like fires and collision have decreased over time, claims linked to war and geopolitical risks have increased sharply as shipowners are increasingly impacted by regional wars, supply chain disruption, hijackings, ship detentions, and sanctions.

“We are in a better position with traditional risks, but geopolitical ones could offset these gains,” said Rahul Khanna, global head of marine risk consulting at Allianz Commercial.

Allianz acknowledged a surge in war risk claims in recent years, with the carrier disclosing that it has settled several total losses, mostly for vessels trapped in Ukrainian ports and waters, as well as an Israeli-linked vessel seized by Iran in 2024.

For the latter, which Allianz said was one of the largest claims in 2024, the crew and cargo were released following diplomatic actions, but Iran continues to detain the vessel.

"This is a classic form of war cover," commented Régis Broudin, global head of marine claims at Allianz Commercial. "If a vessel is detained beyond a certain period of time, typically around 12 consecutive months, the owner can claim a total loss. We saw similar instances in the Ukraine war."

Going forward, protectionist tariffs policies and U.S. plans to address the dominance of China's shipping and shipbuilding industries, as well as the increasing politicisation of shipping 'choke points', look set to have significant implications for the shipping sector, said Allianz.

OLDER VESSELS AND THE SHADOW FLEET

The review continued that while ceasefires have indicated a gradual return to transit through the Suez Canal and the Red Sea, the security threat is likely to remain.

Continuing to reroute vessels around the Cape of Good Hope increases time and costs to supply chains between Asia and Europe, which is exacerbated by inflationary pressures. Allianz added that container ship capacity has been constrained by longer trade routes, which has in part driven an increase in the average age of the global fleet from 20 years to 23 years.

The review also noted the expansion of the shadow fleet of older, poorly maintained oil tankers that engage in the illegal oil trade under "flags of convenience."

Nearly 17% of the global tanker fleet now operates outside the conventional regulations’ purview, often with no proper insurance.

Although recent sanctions make it harder for these vessels to trade, the fleet continues to pose a huge risk to maritime safety and the environment, as many may be old, under-insured and poorly maintained, said Nitin Chopra, senior marine risk consultant at Allianz Commercial.