The Nordic Association of Marine Insurers (Cefor) has released its 2024 hull and machinery coverage report, highlighting key trends in the marine insurance market. Cefor, which covers around 56% of the global fleet above 20,000 gross tonnage (GT), points to significant shifts in claim costs, particularly in the wake of the COVID-19 pandemic.
A central finding of the report is the notable increase in claim costs per vessel. While major claims remained relatively benign between 2015 and 2022, with few claims exceeding $30 million, both 2023 and 2024 saw claims surpassing $50 million. In fact, claim costs in 2023 and 2024 were 22% higher than the average during the period from 2017 to 2019. Cefor attributes this increase to the trend toward larger, more valuable vessels, which raises the likelihood of very large losses.
“Machinery damage has seen a significant rise in recent years, and this is closely linked to the aging global fleet,” said Cefor Actuary Astrid Seltmann. Among the most expensive claims, fires and collisions were the most prevalent.
Cefor also forecasts a “silver tsunami” of aging vessels, noting that many ships delivered between 2008 and 2012 are now between 13 and 17 years old and are increasingly prone to machinery failures, fires, and consequential damages. For vessels built during this period, machinery claims accounted for 56% of claim costs, compared to just 35% for newer vessels.
In 2023, the marine insurance industry reported eleven machinery claims exceeding $5 million, an increase from seven such claims in 2023 and nine in 2022. The majority of these machinery claims were related to damage to the main engines, followed by auxiliary engines and propeller shafts.
Fires and collisions continued to be the most expensive claims in 2024. Since 2019, the shipping industry has seen a rise in the number of fires on container vessels, causing growing concern. In 2023, two of the largest losses above $50 million were the result of fires, while four out of eight losses exceeding $10 million were fire-related. In 2024, four out of nine claims above $10 million were also fires, with the two largest claims attributed to collisions.
Christian Irgens, chair of Cefor’s Statistics Forum, also pointed to an increase in weather-related losses, likely due to vessels being rerouted through more weather-exposed regions. From the end of 2023 through the second quarter of 2024, weather-related casualties showed a steady rise, surpassing the seasonal variation observed in previous years. Irgens noted that increased exposure to severe weather, particularly on longer routes around the Cape of Good Hope, may have contributed to the uptick in weather-related damage.
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