The ocean hull insurance market is returning to a “soft environment” despite increasing premiums, according to Ilias P. Tsakiris, Chair of the International Union of Marine Insurance (IUMI) Ocean Hull Committee, speaking at the organization’s annual conference in Singapore today.

While global hull premium increased by about 3.5% in 2024, reaching USD 9.67 billion, the underlying risk environment is intensifying due to an aging fleet, more severe losses, geopolitical shocks, and complexities surrounding the energy transition.

The global fleet increased 4% in value to an estimated USD 1.54 trillion, with Europe accounting for 53% of premiums, Asia/Pacific 35%, and other regions 12%. This concentrated picture has created “intense competition” in key regions and “significant vulnerability” in the event of a major loss in a key premium center.

“Although in headline numbers, losses have not surged, loss ratios remain under pressure because of higher costs, more expensive incidents and an ageing fleet that is harder to repair,” Tsakiris explained.

The aging fleet presents particular concerns, with the average world-fleet age at 22.6 years. Approximately 35% of ships are more than 25 years old and 61% exceed 15 years. Meanwhile, the order book for replacement vessels represents just 16% of the existing fleet, and scrapping remains at multi-year lows.

In 2024, vessels 20 years or older accounted for 52% of all incidents, while ships 25 years or older were involved in 41% of incidents. Tsakiris described the aging fleet as “a quiet but powerful driver of claims.”

The energy transition adds another layer of risk. Of the 3,466 newbuilding orders placed in 2024, approximately 25% were designed to run on alternative fuels. For 2025 orders to date, that figure has risen to 31%.

“Novel fuels like methanol, ammonia and hydrogen introduce completely new hazard profiles,” Tsakiris noted. “We will be insuring more complex machinery with less repair history and yet the replacement effect is limited, so the average age of the world fleet will continue to rise even as new ships arrive. The energy transition is not just a green story – it is a risk story.”

Geopolitical factors continue to shape the marine insurance landscape. The Ukraine-Russia war and Red Sea security issues have forced rerouting via the Cape of Good Hope, adding time, cost, and heavy-weather exposure. This has resulted in engine failures, weather damage, and higher salvage costs.

Sanctions have also influenced the tanker market, contributing to a shadow fleet representing about 17% of the global fleet. Tsakiris warned that “war premiums are higher but accumulation of risk is harder to control, and the human toll — with detentions, kidnappings, and crew abandonments — continues to rise.”

In a separate session at the conference, IUMI’s Data & Digitalization Forum highlighted the transformative potential of artificial intelligence in marine insurance, with Chair Rahul Khanna emphasizing the need for ethical implementation of the rapidly advancing technology.