Marine & Energy (re)insurance: learning to get comfortable with change

The best way to summarise what may be in store for the next 12 months for the Marine & Energy (re)insurance industry is ‘the only certainty is uncertainty.’

Uncertainty is of course generally negative for governments and businesses. It acts as a brake on decision-making and investment, and can drive additional costs to non-commercially viable levels. Businesses like predictability; the desire to secure it is one of the main motivations behind the purchase of (re)insurance and the reason we’re all here.

Nonetheless, since our last blog for IUMI Berlin 2024 - a landmark industry event – global developments have continued to push uncertainty to new heights, giving us much to consider:

• No end to conflict. Conflicts such as those in Ukraine and Gaza remain unresolved, posing ongoing risks of regional instability and potential spillover effects.  In addition, several other regional hotspots in Asia, the Middle East and Africa continue to present significant geopolitical risks. According to the World Economic Forum’s Global Risks Report 2025, 23% of respondents identified state-based armed conflict as the most likely risk to trigger a material global crisis in 2025, making it the top concern among all risks surveyed.
• Geopolitical pivots, including changes in US trade policy, international nuclear negotiations, and intensified global tensions over access to rare commodities, are driving uncertainty across industries. Should there be more investment in oil and gas, and can this be achieved by pushing for lower barrel pricing? Difficult questions keep coming up that were not previously on the radar. 
• Technology is becoming a major political battleground, while also rapidly changing the business environment. The winners of the race for supremacy in emerging technologies like AI and quantum computing will secure significant competitive advantage. The impacts of emerging technologies on trade, both positive (shipping route optimisation, IoT sensor-based tracking) and negative (cyberattacks, exposure to systemic risk, creation of a digital divide) are increasingly apparent.

These multiple, at times converging, trends raise several critical questions that our industry will need to reckon with in the months ahead. 

Recent conflicts have highlighted the changing nature of war and political perils. The rising use of drones and remote control of battlefield operations are new dimensions that make attacks more accessible to a broader range of actors. The attacks on shipping in the Red Sea, still a threat in the face of allied countermeasures, show how resilient and replaceable these resources are.

Increased production capacity for armaments, sometimes enabled by international cooperation, could prolong or intensify conflicts. The question for us is: How should this impact our view of risk? 

Marine insurance is a true reflection of the health of the world economy and global trade. The imposition of US tariffs on all trading partners and potential for reciprocal tariffs will echo through the marine (re)insurance business. With many trade deals still in the works, it’s still anyone’s guess as to how this impact will materialise.

What is clear is that the WTO framework has become less effective, and that tariffs will increase the cost of products, a cost that must be assumed somewhere in the value chain. If that burden is placed on consumers (early indications sense an increase in US consumer inflation), what happens to demand? Forecasts from the Federal Reserve and Swiss Re’s own economists currently predict substantial reductions in the GDP of both the US and China. Will marine cargo premiums increase through higher valuations of goods, or will lack of consumer demand lead to reductions?

While technology has become indispensable in modern business, its adoption should be accompanied by robust governance, proactive risk management and strategic foresight. Organisations that treat technology as both an enabler and a risk factor are better positioned to harness its benefits, while maintaining the safety and integrity of their operations. For the Marine & Energy industry the question will be: How can we balance potential technology-driven efficiencies in supply chain and inventory management, against the increased risks of cyberattacks and technology dependence?

Wherever we look, change in the risk environment is accelerating, and needs to be acknowledged. Some of this change may be quantifiable if the underlying pattern of trade or assets at risk doesn't alter substantially. However, sudden disruptions – pandemics, the outbreak of war, shifts in the frequency or severity of natural perils, even the growth of US court awards, are less easy to measure, and could alter our view of risk significantly. 

There’s no doubt that the size of individual Marine & Energy risk exposures has increased in recent years, as seen in the size of modern cruise vessels, the TEU capacity of current container carriers, and the scale of developments such as modern offshore energy complexes. Insurance capacity for such risks has also risen, with broader syndication, increased risk appetite from existing markets, and new (re)insurance carriers all feeding the flow of additional capital.

Yet as the patterns and scale of exposure change, so too should our focus on capacity management; the identification and quantification of emerging risks; product innovation and the integration of technology. New risks are becoming more substantial, or introducing systemic complexities that could threaten the profitability and long-term viability of the insurance industry if not adequately assessed and accounted for.

As risks evolve beyond those we have previously experienced, we should rely less on our historical performance as a reference point in policy formation and pricing adequacy. New weather patterns, and the growth of liability inflation costs in US courts are clear reminders the old rules may no longer apply.  Whilst accessing additional capacity to manage new and developing risks is important, the likely pressure for growth to feed the costs associated with this could also undermine the wider market. In essence, solving one problem could lead us towards another.

As an industry, we need to accept and prepare for the scale tipping towards uncertainty in the risk environment – be it in the form of geopolitics, the impacts of technology, or the advance towards sustainability. At Swiss Re, we’re focused on helping you navigate new opportunities and challenges by applying a forward-looking view and innovative approaches, paired with our 160+ years of experience in underwriting risks. We look forward to joining you this conference season to collaborate on solutions that make the future a bit more certain, for all of us.