Neil Roberts is Head of Aviation and Marine at the Lloyd’s Market Association and Chair of IUMI’s Policy Forum.

It’s an old cliché but as 2026 opens, it feels like the shipping industry and the insurance teams that work within it are facing a horizon full of red flags. The marine sector has always relied on harmony and co-operation – between nations states, the shipowner and the men and women who work on the vessels. It now feels that friction could replace harmony with a host of disruptive consequences.

The insurance market remains ready to serve its clients and to keep the wheels of the global economy turning, but it can’t of itself solve the problems that are mounting up. The Lloyd’s Market Association and International Union of Marine Insurance (IUMI) will continue to raise awareness of these issues and lend our knowledge and experience to those who can impact change.

Geopolitical risk

The rise in geopolitical tension we have seen over the last decade has had significant knock-on effects to world trade and therefore the insurance market. Shipping is core to this as 90% of world trade still goes by sea and with the UK being an island, we are especially dependent on it. However, not just in the UK but internationally, many remain sea-blind, impervious to the importance of the oceans to our global economy and infrastructure.

Leaving aside the impact of the tariff wars emanating from the US and longer-term concerns over Chinese and Russian political and military ambitions, the Red Sea remains a major conundrum for the industry, and you don’t have to be a sceptic to believe the likelihood of the current Houthi ceasefire holding is uncertain.

As recently as July 2025, we saw new levels of violence with the successive attacks on the Magic Seas and the Eternity C, using missiles, sea drones and skiffs. Both vessels sank and four crew were killed. Additionally, ten crew were taken prisoner by the Houthis and held ashore until early December.

Financially, any increase in attacks on shipping could be critical for neighbouring countries like Egypt which looks forward to transits returning to 2023 levels. The International Monetary Fund said in July that the Houthi attacks had reduced foreign exchange inflows from the Suez Canal by US$6bn in 2024.

Add to this the remarkable US interventions in Iran, Venezuela and Nigeria. The sheer unpredictability of events is anathema to trade and it’s not difficult to see why seafarers are getting harder to recruit and retain after a year when another 222 ships and their crews were simply abandoned without help.

Legacy of the oil price cap

The political attempt with the oil price cap to use insurance as a lever to push foreign policy objectives has had the side effect of forcing Russia to acquire sufficient tonnage to service its oil needs. These vessels are largely below what might be regarded as international standards, many have been subsequently designated and the consequence is that the West has cut these vessels adrift.

Rendering a large number of elderly vessels unable to trade easily has also left them unable to be scrapped due to sanctions. So, there are now several hundred of these isolated islands of rust and potential pollution presenting a clear risk, but no regulator appears able to deal with resolving the problem.

Rising claims

Unfortunately, there are other worrying developments for the industry.

Piracy in the Indian Ocean is on the rise again. Instability in Yemen and the Horn of Africa more broadly has been fuelling a resurgence in maritime piracy off Somalia with at least three recorded incidents in November. Meanwhile, pirate activity is also picking up in the Singapore Strait as reported by the International Maritime Bureau.

Another major concern is the increasing incidence of fires at sea on containerships and car carriers in particular. Vehicles are transported at scale, with thousands on a given ship, resulting in sizeable loss if something goes wrong. It is debatable whether electric vehicles (EVs) are statistically more prone to catching fire, but when they do, such fires are exceptionally challenging to put out.

It’s a growing problem. Research from IUMI[1] highlights that the volume of cars being shipped by maritime transport globally is around 20 million units per annum and that EV fires present different risks to those emanating from a standard internal combustion engine vehicle (ICEV).

There is some conflicting data about energy release but EV fires are thought to exceed 1,000°C compared to around 600°C for ICEVs and have a higher risk of releasing deadly explosive gases that can accumulate if fires are not rapidly contained. It’s not just EVs that are the problem. Too often, dangerous goods are not declared and can be placed next to hot pipes or on deck in full sun, resulting in ignition.

Partly because of the uncertainty around future propulsion, there are fewer newbuilds and thus an ageing fleet worldwide with vessels more prone to breakdowns. Added to the claims cost is the wait for parts due to minimal stocks of spares held at yards combined with the rising cost of steel.

All of these issues impact on crew and make a career in shipping unappealing, increasing the likelihood of current crews leaving. I get asked sometimes why should insurers care about crews? Simply, although the property market doesn’t directly cover the crew, they are vital to a ship’s function, and they look after the assets we do insure. Without them there would be no trade. So, it is in all our interests in the insurance sector for employers to make the job more appealing for those already serving and, even more importantly, for potential new recruits.  

Environmental risks

The IMO targets on decarbonisation continue to put pressure on the industry to find alternative fuel sources in order to reduce its emissions. There is no clear way forward for shipping but is thought that nuclear power will have to be a component as alternative fuel sources are likely to be inadequate to meet the target. For that reason, the possibility of using nuclear fuel is being taken increasingly seriously, but it remains at an early stage and legislation would need to be changed to accommodate it. Other alternatives which are being trialled, like hydrogen, ammonia and methane, have significant drawbacks being in short supply, potentially dangerous or carbon-based.

While shipping contributes 3% of total global emissions, the decarbonisation picture is further complicated by the current ambivalence of US policymakers to the net zero agenda and concerns over potential legal action against those involved in environmental initiatives.

A lot of attention in the marine insurance sector in 2026 will be focused on the developments following the July 2025 ruling by the Supreme Court of Sri Lanka which found the operators of the MV X-Press Pearl liable for the environmental and economic damage caused by the fire that destroyed and ultimately sank the vessel. The vessel was refused entry to several ports before reaching Sri Lanka although in distress. The case had disturbing echoes of the Prestige and the Felicity Ace in that the X-press Pearl was also refused access to a port of refuge when in distress. And as was seen with the Prestige, Hebei Spirit and the Tasman Spirit, the master was arrested despite following all instructions and making best efforts to avoid the casualty. Nautilus has drawn attention to this criminalisation of seafarers as it puts people off either staying at sea or rising through the ranks.

The defendants were ordered to make an initial payment of US$1bn as compensation for direct environmental harm and consequential economic, livelihood and financial losses, payable within one year because of the ongoing environmental impact of the 75 billion nurdles that entered the marine and eventually human food chain as a result of the accident. Some observers have said the eventual cost of the disaster could be closer to US$6bn, depending on further court decisions.

There is an ongoing initiative to change the IMDG code so that nurdles are designated as dangerous goods, making it easier to ensure they can be stowed below deck but a decision is not expected in the near term.

Can tech provide an answer?

Some commentators have looked to technology to solve some of the problems of the shipping industry, pointing to autonomous shipping research projects like Meguri 2040 in the Far East. Japan and Korea are facing an ageing population and anticipate severe future challenges with recruiting crew. Both countries are pursuing a radical no-crew path and working to bring about transpacific remote shipping.

Although European countries like Norway and The Netherlands are also testing out this technology, and there are a handful of remote short sea ferries trading, many countries don’t have the facilities in place to handle fully remote vessels. Interest in this technology has also dropped down the International Maritime Organization agenda as the UN agency concentrates its focus on developing alternative fuels. The reality is the transpacific route option is not envisaged to be in operation until 2040, and future acceptance worldwide will rely on other countries’ consent and ability to receive remote vessels.

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[1] Best practice paper update: Risk mitigation for the safe ocean and short-sea carriage of electric vehicles | IUMI, 01 September 2025.