The marine and energy re/insurance sector is facing a period marked by heightened unpredictability, according to Adam Watkins, head of marine and energy at Swiss Re.
Watkins described the outlook for the next 12 months as one where “the only certainty is uncertainty,” highlighting the ongoing challenges for both governments and businesses as they navigate a rapidly shifting risk landscape.
Unresolved conflicts in Ukraine and Gaza, along with regional hotspots in Asia, the Middle East, and Africa, continue to generate geopolitical risks. The World Economic Forum’s Global Risks Report 2025 found that 23% of respondents identified state-based armed conflict as the most likely risk to trigger a material global crisis in 2025, ranking it as the top concern.
Watkins noted that changes in US trade policy, international nuclear negotiations, and disputes over access to rare commodities are contributing to an environment where difficult questions about investment in oil and gas, and pricing strategies, are increasingly common.
The global marine insurance market is also experiencing a shift in pricing dynamics, particularly in the hull and machinery segment. In London, intensified competition among insurers for top-tier fleets has led to a softening phase, giving buyers more leverage.
However, some industry analysts caution that this trend could impact pricing stability if multiple carriers pursue growth simultaneously. While technical rating remains insufficient in certain areas, underwriters are striving to retain profitability while selectively expanding their portfolios.
Technology is emerging as both a tool and a risk factor. Watkins pointed out that advancements such as artificial intelligence and quantum computing are changing the competitive landscape, while also introducing new vulnerabilities.
“The impacts of emerging technologies on trade, both positive and negative, are increasingly apparent,” he said. Innovations like shipping route optimization and IoT-based tracking are improving efficiency, but the sector is also contending with risks such as cyberattacks and systemic exposure.
Profitability in the hull and machinery line is further challenged by repair cost inflation. Rising prices for steel, labor, and shipyard capacity have led to increased claim severity, especially for machinery breakdowns. Without adequate premiums, there is a risk that the hull and machinery segment could become unprofitable, underscoring the importance of disciplined underwriting and careful cost management.
Recent conflicts have also underscored the evolution of warfare, with the increased use of drones and remote-controlled operations broadening the range of potential actors. Attacks on shipping in the Red Sea, despite allied countermeasures, remain a concern.
Watkins observed that increased armaments production, sometimes through international cooperation, could prolong or intensify conflicts, raising questions about how risk should be assessed.
Trade policy developments are another source of uncertainty. The imposition of US tariffs on trading partners and the potential for reciprocal measures are expected to affect the marine re/insurance business.
Watkins noted that the weakening of the WTO framework and rising tariffs will increase product costs, which may be passed along the value chain. Early signs suggest an uptick in US consumer inflation, and forecasts from the Federal Reserve and Swiss Re’s economists project substantial reductions in GDP for both the US and China. This raises questions about whether marine cargo premiums will rise with higher valuations or fall due to reduced demand.
Watkins emphasized the need for robust governance and proactive risk management as technology becomes more integral to business operations. He said organizations that view technology as both an enabler and a risk factor are better positioned to balance efficiency gains with the need for operational safety and integrity.
The sector is also seeing larger individual risk exposures, as evidenced by the size of modern vessels and offshore energy complexes. Insurance capacity has grown in response, but Watkins cautioned that as exposures and risks evolve, the industry must focus on capacity management, emerging risk identification, and product innovation.
He warned that relying on historical performance may not be sufficient, given new weather patterns and the growth of liability inflation in US courts.
Watkins noted that the industry must accept and prepare for greater uncertainty, whether from geopolitical shifts, technological change, or sustainability pressures.
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