The Swedish Club has warned that the hull and machinery (H&M) sector remains only marginally profitable heading into 2026, as severity-driven claims from major fires, machinery breakdowns, and total losses—combined with inflation in steel, labour, and repair yards—continue to pressure results amid intense competition and softening rates in the London market.
In its latest Marine Circular No. 448/2025 released on October 14, the Club said the global H&M market in 2025 has been highly competitive, with new capacity from incumbents and managing general agents weighing on pricing. While underwriting discipline has been maintained, ambitions for growth have narrowed margins, and claims severity has kept costs elevated.
The circular highlighted that the average age of the global fleet now exceeds 22 years, while delayed newbuilds and ageing machinery pose ongoing structural risks. Geopolitical exposures in the Red Sea, Black Sea and from the so-called “shadow tanker” fleet were also cited as drivers of volatility that continue to shape insurance terms.
According to the Club, recent severe losses are prompting stronger underwriting responses into the 2026 renewal season. Stricter terms are being applied to older or more exposed units, including car carriers and container trades with dangerous goods exposure. The report said this firmer stance, coupled with wider recognition of underlying cost pressures, may support a gradual stabilisation of the market cycle.
The Swedish Club noted that its own marine portfolio remained stable in 2025 despite competitive conditions, with premium income easing slightly year-on-year. While H&M results were affected by a higher incidence of large claims, ancillary classes such as Builders Risk, War, Increased Value, Loss of Hire, and Energy contributed positively to overall performance.
This outlook mirrors recent broker and industry data pointing to a turning point in the hull and machinery cycle. Gallagher Specialty reported that the market is expected to shift from growth to profitability in 2026 following second quarter softening and conflict-related vessel losses.
Meanwhile, the International Union of Marine Insurance provided complementary data showing Asia-Pacific’s growing role in the sector, accounting for 29.79% of global marine premium income in 2024 as the region contends with ageing fleets, inflationary repair costs, and geopolitical tensions affecting global trade.
