SPOTLIGHT: HULL & WAR
Hull & Machinery
The Hull & Machinery (H&M) Insurance market remains favourable for buyers in 2026, with reduced premium rates driven by increased underwriting capacity and, until recently, relatively favourable claims experience.
A key contributor to this additional capacity has been the emergence of new Managing General Agents (MGAs), which has intensified competition across the sector. As insurers compete for well-performing risks, clients have benefited from enhanced negotiating leverage and broader market options.
While loss performance has generally remained stable, the market is beginning to experience increasing claims severity as inflationary pressures drive up repair and replacement costs. This trend is expected to influence future underwriting strategies and pricing considerations.
Several factors are contributing to the rising cost of H&M claims:
- Ageing global fleets – older vessels present a higher risk of mechanical failure and operational incidents, increasing both the frequency and severity of claims.
- Larger vessel sizes – the continued growth in vessel dimensions means that damage events can result in significantly higher repair costs and more complex, expensive salvage operations.
- Rising repair costs – increases in steel and spare parts prices, higher labour costs, and the growing sophistication of onboard technology have all increased the cost and complexity of repairs following an incident.
- Elevated vessel values – ongoing disruption to global trade routes, including impacts arising from conflict in the Middle East, has contributed to increased freight rates and stronger vessel valuations. While this has supported premium growth across the market, it has also increased potential claims exposures and total loss values.
War Risk
War Risk Insurance has become an increasingly important consideration for marine clients, with a number of key trading regions experiencing sustained disruption and heightened risk. Recent unrest and attacks in and around the Gulf have created greater uncertainty around voyage planning, insurance requirements, and the cost of cover. Claims activity is also increasing across other principal areas of concern, including the Black and Red Seas.
Despite heightened tensions, War Risk cover remains available across all current breach areas. The key consideration for clients is increasingly the cost and terms on which cover can be secured, rather than its availability. Pricing remains highly dynamic, and reflects the specific risk profile of each trading area, with underwriters often providing quotations with only48-hour validity – reflecting the speed at which geopolitical circumstances evolve.
In particular, rates for Hull War Risk continue to face upwards pressure. Although overall claims volumes remain manageable, the market has seen a growing frequency of single-digit-million-dollar claims, along with continued exposure accumulation. The expansion of excluded and restricted trading areas has also resulted in additional Charterers’ War premiums, which are becoming a more meaningful component of overall voyage economics.
As a result, the market is becoming increasingly risk-selective. Pricing is driven not only by geography, but also by factors including flag, ownership, charterer, cargo, and trading pattern. In particular, Saudi, US, UK, and Israeli-linked vessels can attract higher rates in parts of the Red Sea and Gulf, where they remain more exposed to persistent attack risk.
In response to these evolving conditions, clients should consider the following:
- Seek War Risk advice early – early engagement with specialist advisers, brokers, and underwriters can help clients assess exposures, understand available cover options and avoid delays as voyage risks evolve.
- Revalidate quotations where circumstances change – War Risk terms and pricing can move rapidly, so quotations should be revisited where voyages are delayed or where there are material changes to a vessel’s itinerary, timing, or exposure profile.
- Charterers should assess War Risk costs before fixing voyages – with additional War Risk premiums becoming an increasingly significant component of voyage economics, charterers should understand the potential cost implications before committing to a fixture or voyage.
Throughout the remainder of 2026, underwriters will continue to closely monitor claims activity, vessel exposure, and the potential for further escalation across the principal breach areas. We anticipate increased focus on pricing, payment terms, and portfolio management as insurers respond to higher claims activity and seek to strengthen liquidity within their War Risk portfolios.
