Report Reveals Rising Claim Costs and Trends in Hull and Machinery Coverage

The Nordic Association of Marine Insurers (Cefor) recently published its 2024 hull and machinery coverage report, shedding light on key trends in the marine insurance industry. Cefor holds a coverage share of approximately 56 percent of the global fleet above 20,000 gross tonnage (GT). One significant finding in the report is the increase in claim costs per vessel following the pandemic. While major claims had minimal impact from 2015 to 2022, 2023 and 2024 saw claims exceeding $50 million, a 22 percent rise compared to the average from 2017-2019. This surge is attributed to the industry’s shift towards larger and more valuable vessels, which raises the likelihood of substantial losses.

Cefor’s Actuary Astrid Seltmann highlighted a notable rise in machinery damage in recent years, particularly among older vessels in the fleet. Fires and collisions were the leading causes of major losses, with machinery claims accounting for 56% of the total claims cost on older vessels compared to 35% on newer ones. The report also revealed an increase in machinery claims above $5 million, with the main engine, auxiliary engines, and propeller shafts being the most commonly affected components.

Furthermore, fires and collisions emerged as the most costly types of claims in 2024, signaling a concerning trend in the shipping industry. Christian Irgens, chair of Cefor’s Statistics Forum, highlighted a rise in heavy weather losses, possibly linked to vessels rerouting through more weather-exposed areas. Weather-related casualties showed a steady increase from the end of 2023 through the second quarter of 2024, surpassing the seasonal variations of previous years. The heightened exposure to weather events on longer routes, such as around the Cape of Good Hope, may have contributed to the uptick in weather-related damages.

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