The market has seen an influx of new capacity in the MGA space, including AI Marine and Clearwater. Gardian Marine has also recently opened for business, specialising in ship construction risks. This is in addition to other more established MGAs entrants over recent years which include the likes of Vessel Protect, Navium, Fortify, and Amphitrite. The long-term presence of these MGAs is great news for brokers and owners in terms of the choices available.

The MGA model has become increasingly popular for a number of reasons. MGAs can be good for brokers to work with because they operate in specific niches of industry and are able to quickly understand what we are looking for and what they can do to assist. Gallagher works with a number of pureplay marine MGAs which are characterised by highly responsive service. This is perhaps brought more into the spotlight since COVID19 where transacting business electronically has become the norm. MGAs are a great home for underwriters who may have worked at large multiline insurers and looking to become the masters of their own destinies as they can make critical decisions more easily than in some large organisations. MGAs are also attractive for large insurers to provide capital without hiring the requisite Underwriting expertise internally. They often play in areas of the market which may be cumbersome or inefficient to participate in directly and they can also tailor their level of participation depending on market conditions.

Equally important for market dynamics is the increased appetite of well-established players in the market who are looking to grow their portfolios following some more profitable years. It is worth noting that the majority of new capacity deployed (both MGA and traditional) has been concentrated in the London market, with offerings in Scandinavia, France, Italy, Singapore, and the Middle East remaining relatively unchanged.

The overall picture is an attractive one for shipowners. Hull placements continue to be heavily verticalised and buyers can maintain long-term relationships with lead underwriters whilst taking advantage of the increased choice to place new shares at favourable pricing levels.

A characteristic of the last softer market cycle until 2018 was the use of profitable war premium income to cross-subsidise hull portfolios and prop up some underwhelming results. The potential to do this in 2025 and beyond remains uncertain. The claims environment for War Risks is extremely volatile at the current time. Due to the ongoing situation in the Red Sea with the Houthis, premiums for transits are understandably high, however, the volume of vessels transiting is at a historical low. This means the risk is not spread and the inevitable claims are concentrated across a much smaller group of ships. There is therefore far greater potential for an unlucky hit leaving a war book unprofitable and certainly not generating the level of return which disguises poor performance across other lines such as Hull and Loss of Hire. Furthermore, many Underwriters continue to cover vessels in Black Sea Ukraine / Russia with limited, or in some cases no reinsurance protection, due to reinsurance capacity in this area being largely withdrawn in 2023.

The volatility in the war market, along with the extremely high levels of service required, has created an environment where specialist war underwriters have excelled. Whether that be mutual war insurers like DNK, or specialist war MGAs like Vessel Protect, the speed of service for sanctions screening, quotations, and documentation has come to the forefront.