Marine Insurance Market Enters Soft Phase as Capacity Expands and Rates Decline

The global marine insurance market has transitioned into a soft phase following seven years of remediation, marked by expanding capacity and downward pressure on rates. This shift represents the first time since the pre-pandemic era that negotiating leverage has favored buyers, particularly within the hull and machinery and ports and terminals sectors. Understanding these cyclical changes is critical for shipping operators and brokers to secure favorable terms before potential loss events or reinsurance corrections reverse the current trend.

After a period of acute stress beginning in 2018, the marine insurance market is now characterized by falling rates and loosening terms. The Lloyd’s market reported an aggregate price reduction of 3.7% across all classes for 2025, the first negative movement since 2017, with the marine hull sector leading this downward trend. New entrants, including Managing General Agents (MGAs) and U.S. domestic carriers, are aggressively deploying capacity into a class that was previously difficult to access, creating a finite window of opportunity for buyers that historically lasts two to three years.

The current profitability follows a rigorous remediation program known as the ‘Decile 10’ review, which forced Lloyd’s syndicates to address underperforming business after consecutive loss-making years between 2017 and 2020. While the Marine, Aviation & Transport (MAT) line saw combined ratios as high as 113.3% in 2018, the underlying technical position has materially improved. Currently, hull and machinery rates for blue water tonnage in London are seeing reductions of up to 10%, while ports and terminals have also flipped from seeking increases to offering property reductions of 10%. However, marine liability remains an outlier, still facing upward pressure due to the Dali/Baltimore bridge claim and U.S. nuclear verdict exposure.

Protection and Indemnity (P&I) clubs present a different dynamic, maintaining record-high free reserves despite a sharp deterioration in technical results for the 2024/25 period. The International Group (IG) saw its combined ratio climb to approximately 110% on a financial-year basis, driven by record pool claims activity, including the $2.8 billion Dali claim, which is considered the largest marine loss in history. Meanwhile, fixed-premium P&I options from commercial carriers and Lloyd’s are becoming more common for small-to-mid tonnage. In contrast to the general softening, the war risk market has seen extreme volatility; following the 2026 Iran conflict, premiums in the Persian Gulf surged from 0.25% to as high as 10% of vessel value.