Today, we’re thrilled to sit down with Simon Glairy, a renowned expert in insurance and Insurtech, with a deep focus on risk management and AI-driven risk assessment. With years of experience navigating the complexities of the marine insurance market, Simon offers unparalleled insights into the trends and challenges shaping this dynamic industry. In our conversation, we explore the record-high premiums of nearly $40 billion in 2024, the dominance of cargo insurance, the struggles within the hull and machinery sector, regional shifts with Asia’s rapid rise, and the unique dynamics of offshore energy and protection and indemnity markets. Let’s dive into this fascinating discussion about a market at a crossroads.
Can you walk us through the key drivers behind the marine insurance market reaching a record high of nearly $40 billion in 2024?
I’m glad to break this down. The surge to almost $40 billion in premiums this year is a culmination of several factors. Global trade continues to expand, even if unevenly, and that naturally boosts demand for marine coverage, especially in cargo insurance. We’ve also seen heightened awareness of risks—geopolitical tensions, supply chain disruptions, and climate-related challenges have pushed shipowners and operators to secure more comprehensive policies. Additionally, inflationary pressures have driven up the value of insured goods and vessels, which in turn inflates premium volumes. It’s a milestone, no doubt, but the story behind the numbers is more nuanced than just growth for growth’s sake.
What’s your take on why the growth rate slowed to just 1.5% last year, compared to much stronger increases in previous years?
The slowdown to 1.5% in 2024, down from 5.9% in 2023, reflects a market hitting a saturation point in some areas. Overcapacity is a big issue—there’s simply too much capital chasing too few risks in certain lines, which suppresses rate increases. We’re also seeing softening in core segments due to competitive pressures, especially as new players and returning participants enter the fray. On top of that, economic uncertainties and shifting trade patterns are making clients more cautious, sometimes opting for reduced coverage or higher deductibles. It’s a signal that the market’s momentum is being tested by structural challenges.
Looking at cargo insurance, which accounts for over 56% of total premiums, what makes this segment such a powerhouse in the marine sector?
Cargo insurance’s dominance, holding over 56% of premiums, comes down to the sheer volume and value of goods moving across the globe. Every container ship, every bulk carrier—these are lifelines of international trade, and the risks tied to loss, damage, or theft are immense. Businesses can’t afford to leave those exposures uninsured, so demand remains robust. Plus, cargo policies often cover a wide range of perils, from natural disasters to piracy, which justifies higher premiums. It’s the backbone of marine insurance because it mirrors the pulse of global commerce itself.
Cargo loss ratios have improved for seven consecutive years. What’s contributing to this positive shift?
The steady improvement in cargo loss ratios over seven years is a testament to better risk management and data-driven underwriting. Stable attritional claims—those smaller, routine losses—have helped keep costs predictable for insurers. Technology plays a huge role here; real-time tracking of shipments, weather forecasting, and AI tools for risk assessment allow for proactive measures to prevent losses. Also, collaboration between insurers, shippers, and logistics firms has tightened up safety protocols. It’s not perfect, but the industry has learned to mitigate everyday risks more effectively.
With hull and machinery insurance facing rising loss ratios for five years now, can you explain the primary reasons behind this troubling trend?
The hull and machinery segment is under real pressure, with loss ratios climbing for five straight years. One major factor is the aging global fleet—many shipowners are delaying scrapping older vessels due to high replacement costs, so we’re seeing more wear-and-tear claims. Harsh operating conditions, like those from rerouting around conflict zones, expose ships to greater physical stress. Then there’s inflation hitting repair costs hard; what used to be a fixable issue often turns into a constructive total loss because repairs are uneconomical. It’s a vicious cycle of higher risks and higher payouts for insurers.
How have trade route changes, like rerouting ships around the Cape of Good Hope, affected hull insurance claims?
Rerouting around the Cape of Good Hope, often to avoid conflict zones like the Red Sea, has had a noticeable impact on hull claims. The longer voyages mean ships are exposed to rougher seas and harsher weather for extended periods, increasing the likelihood of structural damage or equipment failure. Fatigue on both the vessel and crew can lead to accidents as well. Insurers are seeing a spike in claims for things like hull stress fractures or machinery breakdowns, and these detours are stretching the risk profile of policies that weren’t originally priced for such conditions.
Turning to regional trends, what’s fueling China’s rise as the largest single cargo market with 17.6% of premiums?
China’s ascent to the top cargo market, with 17.6% of premiums, is tied to its position as the world’s manufacturing hub. The sheer volume of exports—everything from consumer goods to industrial components—drives massive demand for cargo coverage. Add to that the Belt and Road Initiative, which has expanded trade networks, and you’ve got a recipe for growth. Chinese underwriters are also becoming more competitive, offering tailored products and leveraging local market knowledge. It’s a combination of economic scale and strategic focus that’s propelled them to the forefront.
Asia accounted for 60% of premium growth in 2024. Do you see this momentum positioning Asia to overtake Europe as the leading region anytime soon?
Asia’s contribution to 60% of premium growth in 2024 is a clear sign of its rising influence, and yes, I do think it’s on track to challenge Europe’s long-standing dominance. The region’s growth is fueled by expanding economies, increasing trade volumes, and a burgeoning middle class driving consumption. Meanwhile, European markets are grappling with slower economic growth and regulatory headwinds. If current trends hold, I wouldn’t be surprised to see Asia take the lead within the next five to ten years, especially as countries like India and Southeast Asian nations ramp up their maritime activity.
London holds over 60% of the global offshore energy market. What makes it such a dominant force in this specialized area?
London’s grip on over 60% of the offshore energy market is rooted in its historical expertise and infrastructure. The city, through Lloyd’s and other major players, has centuries of experience in underwriting complex, high-value risks like oil rigs and offshore wind farms. It’s a hub for specialized talent—brokers, actuaries, and loss adjusters who understand the unique perils of this sector. Access to global capital and a robust legal framework for dispute resolution also make London a trusted center. Even as other regions grow, London’s deep-rooted ecosystem keeps it ahead.
As we wrap up, what’s your forecast for the marine insurance market over the next few years, especially given the challenges of overcapacity and rising risks?
Looking ahead, I think the marine insurance market will navigate a delicate balance. Overcapacity will continue to pressure rates in the short term, especially in competitive lines like cargo, potentially squeezing profitability. However, rising risks—whether from geopolitical instability, climate change, or aging fleets—will force insurers to tighten underwriting discipline and innovate with tools like AI for better risk assessment. I expect moderate growth, likely in the 2-3% range annually, with Asia continuing to drive much of that. The key will be adapting to complexity; those who can balance capital inflows with smart risk management will thrive in this evolving landscape.
