Willis Re says the marine war risks market, once a sleepy corner of reinsurance, now looks nothing like the world Lloyd’s underwriters imagined when they first split “risks of the seas” from “risks of men” back in the late 19th century.
That historic separation built the framework for modern war cover, but the calm that followed lasted longer than anyone expected.
Treaties softened naval aggression, pirates backed off, and reinsurers treated the class like a tidy specialty. Then the quiet cracked.
Now the firm argues the stability of the last century has evaporated. Maritime hostility is climbing fast, sometimes openly and sometimes in the shadows.
Iranian and Israeli forces trading hits in the Strait of Hormuz. Chinese authorities muscling trade routes in the South China Sea. Houthi militants tossing missiles, drones, explosive boats into Red Sea shipping since late 2023.
Even Black Sea tankers taking rocket damage as the Ukraine conflict drags on. Off Somalia, piracy flickers back to life. And U.S. naval actions against smuggling rings in the Caribbean and Pacific add more noise to a map already full of problems.
Willis Re calls much of this a “gray zone” environment. Not full blown war, not peace, just aggressive pressure designed to score political or economic wins.
According to our analysts, that gray zone is exactly where insurers struggle, because responsibility stays blurry and escalation patterns jump around without warning. Brokers call it the part of the market that makes everyone’s stomach drop.
And it’s not just physical attacks. Cyber interference is hitting the maritime sector every day. Spoofed GPS and AIS data, ship positions faked, navigational chaos created on purpose.
Willis Re says some operations now aim at disrupting automated underwriting tools that rely on vessel tracking feeds.
The line between physical and digital aggression keeps fading, maybe faster than carriers can update their own rulesets.
Reinsurers responded by tightening terms. First came the RUB exclusions tied to Russia, Ukraine, and Belarus.
After that, pressure mounted to carve war risks out of charterers’ P&I cover, shifting them into separate, sub limited solutions that sometimes cost more than the original protection.
That change alone tells you how quickly reinsurers want distance between themselves and the new reality.
Accumulation risk also returned as a serious topic. Before COVID 19, marine folks liked to say ships rarely cluster in ways that trigger catastrophic losses.
Then dozens of cruise liners sat immobilised off the U.S. coast, stacked with more than 90,000 crew. When Russia invaded Ukraine, vessels got trapped in Mariupol and Odesa.
Marine lines dodged a huge loss there, but aviation markets didn’t. Aircraft seizures smashed their balance sheets, and that shock echoed across reinsurance programs everywhere.
Now treaty reinsurers are pushing geographic aggregation controls and other limits to avoid getting blindsided by another cluster event.
Willis Re pointed to drone strikes in Tuapse, where multiple tankers took damage in one go. Some belonged to the shadow fleet dodging sanctions, but even those vessels often carry indirect global reinsurance exposure. A single incident suddenly becomes everybody’s problem.
Another headache: war risk premium pools are thinning out. When vessels reroute away from the Red Sea or other hotspots, fewer premiums collect along those original corridors.
One heavy loss could blow past the entire pool for that region. Pricing gets weird. Sustainability gets shakier. We think that part may keep underwriters awake more than the missile strikes.
On the cyber side, reinsurers now exclude conflict related operations outright. Willis Re points to LMA5630, the Lloyd’s clause that strips cover for warfare tied cyberattacks. Most treaties follow that blueprint now, tightening the cyber war carve out with little debate.
Despite all this, the wider marine market is softening. New capital flows in through MGAs and facilities, and rates drift downward even as global tension climbs.
Recent conflict losses stayed within tolerable bounds, so competition builds again. Willis Re expects that pattern to hold into the 2026 renewals.
Strange mix: volatility rising, prices falling. But that’s marine. It rarely behaves the way models say it should.
