14 April 2025
Marine Hull and Machinery and War Risks Market Update Q2 2025
We’re pleased to release the Q2 2025 edition of the Gallagher Marine Hull & Machinery and War Risks Market Report. As expected, the start of 2025 has been characterised by a gradual softening of Hull and Machinery rates. This has been most acutely felt in the London market, where increased competition for the most desirable fleets has given buyers more choice and ultimately created a rating environment in their favour.
Whilst technical rating is still, in many cases, insufficient, there is some discipline remaining in the market as Underwriters try to retain profitability whilst selectively growing their portfolios. The challenges arise when multiple large participants try to grow simultaneously, all targeting the same segments of the market. Underwriters initially look to grow in the most desirable segments but then quickly have to look elsewhere to meet ambitious growth targets. This has a knock-on effect on ratings across the market. At the current time, buyers are benefitting from increased choice and a gradual softening of rates, which is generally a healthy point of the market cycle. We will be closely watching whether this softening becomes sharper in the second half of 2025. Whilst this may give some short-term gain for buyers, it is not in the long-term interest of the shipping community for the market to fall back into a loss-making position.
Whilst major casualties have thankfully been infrequent, the recent collision of general cargo vessel ‘Solong’ with tanker ‘Stena Immaculate’ brings into sharp focus the sheer size and scale of potential incidents. Whilst the consequences in this case were dire and led to the tragic loss of a crew member, the response of the crew of ‘Stena Immaculate’ prevented a far graver result.
Navigating the future of shipping
The International Maritime Organisation's ambitious ‘Net-Zero’ Green House Gas emissions target by 2050 is a defining challenge for the maritime industry.
It is beyond doubt that improvements in technology, automation, and overall standards of safety at sea have led to an improved overall loss experience with a lower frequency of accidents. However, it is also unquestionable that claims inflation is starting to bite, as predicted over the last few years. The cost of regular machinery breakdown claims is soaring due to higher repair costs. The price of steel, labour, and yard space have all increased, directly impacting overall loss ratios. Hull & Machinery is a line of insurance business which is marginally profitable at best. General rate reductions along with increased cost of claims can easily push the market back to a loss-making position in a very short space of time.
The War Risks market continues to react to the rapidly changing geopolitical environment. The two most significant conflicts affecting shipping have both been the subject of intense ceasefire negotiations, but in both cases, peace still seems some way off.
In this edition, we welcome a special contribution from our friends at OSM Thome and Evigo, on the path to net zero for shipping. They explore the latest opinion on alternative fuels, most notably the commercial suitability and the safety implications.
Casualty report
Stena Immaculate / Solong Collision
On 10 March 2025, the container ship MV Solong collided with the oil tanker MV Stena Immaculate, which was at anchor in the North Sea off the coast of East Yorkshire.
Solong, a Portuguese ship flagged out of Madeira, was carrying alcohol but was also initially thought to have been carrying sodium cyanide. The US-registered Stena Immaculate was carrying aviation fuel on a charter for the United States Air Force (USAF); both ships also had a supply of heavy fuel for their own use. Following several explosions, both vessels caught fire and were abandoned. They remained entangled for the rest of the day, when they separated. Solong began to drift. Thirty-six people were rescued, with one hospitalised, and one missing, presumed dead.
There was no indication of any third-party or malicious involvement in the crash, and the primary concerns were to limit potential environmental damage from leaking aviation and ship fuel. A rescue operation involving several European countries was delayed due to fog.
An investigation involving the two flagged countries and the UK was announced on 11 March. The same day, Humberside Police opened a criminal investigation and arrested the captain of Solong. On 14 March, he was charged with gross negligence manslaughter.
The Solong will be towed to Aberdeen.
The crew of the STENA IMMACULATE demonstrated “exceptional professionalism” after the tanker was struck by the containership SOLONG off England’s East Yorkshire coast, preventing what could have been a far more severe incident.
According to Stena Bulk CEO Erik Hånell, crew members activated fire monitors to provide boundary cooling water to adjacent cargo tanks before being forced to abandon ship. This quick thinking significantly limited damage to only the directly impacted cargo tanks.
id anim
Dolor laboris enim esse est ea. Id ut elit ad tempor.
anim duis
Nostrud proident consequat proident fugiat qui eu.
Marine War Risks
The Marine War Risks market has continued its trend of unpredictability and fragility. The extremely fragile ceasefire in Gaza recently collapsed, and there is a general assumption that this will lead to the Houthis resuming attacks on international shipping in the Red Sea. The ability of the Houthis to resume operations may be affected by recent US air strikes against their infrastructure in Yemen. Nonetheless, the threat level for vessels transiting is deemed to be very high, and many owners continue to divert vessels around the Cape. Negotiations regarding an end to hostilities in Ukraine are ongoing, with the US taking a lead role in resolving matters. The two sides still seem some way apart in terms of their demands and requirements. This means there are still , high risks for vessels in the Black Sea, particularly those calling at Ukraine ports where multiple vessels have been struck by Russian missiles during March 2025. One of the key initial negotiating points on a ceasefire deal is the immediate cessation of hostilities in the Black Sea. At the time of writing, this is being discussed between US, Russian and Ukrainian negotiators, with significant roadblocks regarding the lifting of sanctions still preventing a final agreement.
Middle East
Under the extreme danger posed by the Houthi rebels and their offensive against Israel, the Middle East has been the most turbulent and reactive high-risk area in Marine War Risks over the past 18 months. From the initial hijacking of the ‘Galaxy Leader’ to the total loss of ‘MV Rubymar’ and the oil spillage from ‘Sounion’, the Houthi attacks have devastated commercial shipping.
Russia and Ukraine
In Europe, war continues between Russia and Ukraine, with further maritime incidents and casualties in the Black Sea serving to remind us of the severe threat to commercial shipping.
A Russian ballistic missile attack on 1 March 2025 damaged two cargo vessels in the Ukrainian port of Odesa. A subsequent offensive directed at Odesa on 11 March 2025 resulted in damage to the bulk carrier ‘MJ Pinar’ and the deaths of four Syrian crew members.
Shadow Fleet
Since the breakout of war, Russia’s ‘shadow fleet’ has been notorious for evading Western sanctions and facilitating the exportation of oil products from Russia. The vessels tend to be aging tankers and are alleged to carry over 80% of Russia’s crude oil exports[1]. They often have no explicit affiliation to Russia as they frequently switch flags to avoid regulatory scrutiny and have weak ownership structures to hide true owners.
Piracy
In addition to the volatile War Risks landscape, piracy also remains a threat to merchant shipping. On 16 March 2025, the Yemeni fishing vessel ‘AL-HIDAYA’ was hijacked off Somalia. Seven suspected pirates held eight Somali crew members aboard[1]. This piracy follows a series of similar attacks in the region, including the hijacking of vessels ‘SAYTUUN-2’ and ‘AL NAJMA’ in February 2025.
Let's talk
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.