Marine insurance and the changing anatomy of trade risk

IN Partnership with

A single blocked canal or diverted shipping route can ripple through worldwide trade within days, and marine insurers are rethinking how they assess and price that exposure

DOCTORS HAVE a word for an artery blockage that causes damage far beyond the blocked vessel itself: referred pain. An embolism forms in one part of the circulatory system, but the pain often surfaces somewhere else entirely. Global trade is behaving the same way. In March 2021, a single container ship grounded sideways in the Suez Canal and stopped roughly 12% of world trade for almost a week. The pain of that blockage showed up in shipping delays on the other side of the planet, in inventory shortfalls, in freight costs that rose long after the ship had been freed. The ‘Ever Given’ incident was far from an isolated episode. Drought restrictions in the Panama Canal from mid-2023, attacks on commercial vessels in the Red Sea from late 2023 and the collapse of Baltimore’s Francis Scott Key Bridge in March 2024 have each produced the same pattern in recent years: a localised event, and symptoms that surface throughout the whole system. If global trade were a human body, doctors would be telling the patient to make significant lifestyle changes.

AXA XL is the P&C and specialty risk division of AXA, known for solving even the most complex risks. For mid-sized companies to the world’s largest multinationals, we offer traditional and innovative insurance solutions and services in over 200 countries and territories. Whatever path your business is on in these uncertain and fascinating times, we’ll be there. Wherever and whenever you need us. How? It starts with a strong and efficient capital platform, data-driven insights, leading technology and a flexible approach. Driven by a culture of superior service, our talented and recognised teams are empowered to create relevant solutions across all our lines of business − property, casualty, professional, financial lines and specialty.

Find out more

Slowdown in global shipping times, 2023–2026

Q2 2023

“In an increasingly interconnected environment, climate risks, geopolitical events and infrastructure constraints often interact rather than occur independently”

Tom Hughes, AXA XL

For marine insurers, the pattern points to a change in the nature of the business they underwrite. The trade network, like a body with blocked arteries, does not only fail in isolated pieces. It fails as a system, and it is the system, not any single vessel or port, that increasingly needs to be understood, monitored and treated. Tom Hughes, head of marine underwriting at AXA XL in Australia, has seen that shift play out across the disruptions of recent years. “These events reinforce an important reality: that some of today’s most significant exposures do not arise from a single point of failure. They emerge from interdependency,” he says.

When one disruption reaches every corner of tradeMarine insurance has grown up alongside global trade for centuries, following shipping routes and cargo movements as commerce expanded across the world. That history still shapes the discipline, but the nature of today’s risk itself has moved on from the vessel, the cargo and the single port to the network as a whole. The ‘blocked artery’ events of the last few years all went on to affect shipping schedules, freight costs, inventory management and commercial decision-making well beyond where they began. Hughes says these events point to something insurers need to take seriously. “The risks shaping marine insurance [are] being increasingly affected by the interconnected systems that support global trade, such as supply chains, transport networks, logistics infrastructure and critical trade corridors,” he says. That shift changes what underwriters need to be looking at day to day, moving the focus away from any one insured item and onto the wider web it sits within. “Understanding how risk moves through connected systems is becoming just as important as understanding individual assets,” Hughes adds.

What has changed most is where exposure can build up along the way. “In modern supply chains, exposure often develops between origin and destination,” Hughes says. Cargo can be delayed, rerouted, concentrated or stranded as external events disrupt trade flows, creating accumulation risk in places that were never part of the original underwriting picture. The Red Sea disruption is a clear illustration of how quickly this can unfold. As vessels diverted around the Cape of Good Hope to avoid security threats, transit times increased substantially. “What initially appeared to be a routing issue quickly created broader challenges involving inventory shortages, increased freight costs, vessel congestion and downstream supply chain delays,” Hughes says. This is where visibility becomes valuable to brokers and their clients, not just to insurers, since knowing where cargo and

“Paid claims show only part of the picture. Some of the most useful insights have arisen from near-miss events where vulnerabilities were exposed but losses were ultimately avoided”

Sameen Naveed, AXA XL

The bottlenecks reshaping global commerceStrategic maritime bottlenecks such as the Panama Canal, Suez Canal and Strait of Hormuz have always mattered to marine insurers, but the pressure on them has changed in character. The Panama Canal is a case in point. “Water shortages and drought conditions have reduced canal transit capacity, creating delays, rerouting requirements and increased transportation costs. Such an issue would normally have been viewed as an operational concern for shipping companies. Today, its effects extend throughout global supply chains and into inventory strategies, production planning and contractual performance,” Hughes says.

Published 7 Sep 2026

Average days from initial booking to clearing gate at final port

Q1 2024

Q4 2024

Q1 2025

Q2 2026

Source: E2 Open Shipping Index

Source: IUMI major claims database

2014

Incurred cargo losses and average loss value, 2014–2024

Incurred losses (US$m)

Claim records

Average loss (US$m)

779

496

1.6

2015

1,303

543

2.4

2016

736

495

1.5

2017

567

516

1.1

2018

1,290

717

1.8

2019

1,190

814

1.5

2020

1,345

573

2.3

2021

994

663

1.5

2022

1,408

795

1.8

2023

856

719

1.2

2024

677

583

1.2

value are sitting at any given moment shapes the conversations underwriters can have before a problem escalates. “Understanding where cargo is moving, where values are accumulating and which trade lanes are under pressure allows insurers to have more meaningful conversations with brokers and their clients,” Hughes says. Armed with that picture, insurers can price risk more accurately and manage accumulation before it turns into a loss, rather than reacting after the fact. “Better visibility supports more informed pricing, stronger accumulation management and improved decision-making before disruption becomes loss,” he adds. Risk no longer sits stillAccumulation risk used to be associated with fixed locations, such as ports, warehouses or storage terminals, where insurers could reasonably predict where value would gather. But this is now changing – concentrations can build up dynamically as cargo is redirected, vessels are delayed or supply chains adapt on the fly to disruption. Hughes argues that shift challenges long-held assumptions in underwriting, moving the central question away from where an asset physically sits. “The critical question is no longer simply where the asset is, but what it depends on and how disruption could cascade through the wider system,” he says. To respond to this, AXA XL has brought underwriters, claims specialists, risk engineers, brokers and clients closer together. “Understanding interconnected exposures provides more valuable insight than focusing solely on individual insured assets,” Hughes says.

Geopolitical events affecting the Strait of Hormuz carry similar reach, with the potential to influence global energy markets, shipping costs and broader commercial activity, and Hughes sees these pressures as connected rather than separate. “In an increasingly interconnected environment, climate risks, geopolitical events and infrastructure constraints often interact rather than occur independently,” Hughes says. That interconnection means clients can no longer treat resilience as something that only concerns operations teams once a disruption hits. “For clients, resilience can no longer be viewed solely as an operational consideration. Supplier diversification, route flexibility, business continuity planning and supply chain visibility are increasingly important components of risk management,” he says. What claims data cannot showNot every valuable lesson comes from a paid claim. Sameen Naveed, senior claims specialist for marine at AXA XL in Australia, says some of the most useful insights come from disruptions that never turn into an indemnity payment at all. “Some of our most valuable lessons come not only from large losses but also from disruptions that don’t necessarily result in an indemnity payment,” Naveed says. Claims data has traditionally been the main lens through which the marine industry has understood risk, built on records of what was paid out and why. The International Union of Marine Insurance (IUMI) claims database shows incurred cargo losses for 2024 totalled US$677 million for an average loss of US$1.2 million, but Naveed argues that there is a bigger story behind the official numbers.

“Marine insurance has traditionally relied on claims data to understand risk. Yet paid claims show only part of the picture. Some of the most useful insights have arisen from near-miss events where vulnerabilities were exposed but losses were ultimately avoided,” she explains. During the Red Sea disruption, many cargo interests avoided losses altogether by acting early. “Many cargo interests successfully mitigated potential losses by rerouting shipments, adjusting inventory strategies or securing alternative logistics arrangements before disruptions escalated into claims,” Naveed says. A similar pattern played out during the Panama Canal restrictions, where businesses that had planned ahead came through in noticeably better shape than those that had not. “Businesses demonstrated considerable resilience through proactive planning and flexible supply chain arrangements,” she adds.

From a conventional claims standpoint, these episodes can look like nothing happened at all, since there is no claim payment or loss ratio impact to point to. Naveed argues that absence of a paper trail is exactly why these events get overlooked, even though they reveal just as much about an organisation’s exposure as a paid claim would. “These situations may not appear as incidents at all, because there is no record of claim payment, loss ratio impact or a catastrophic loss. But they provide valuable intelligence about underlying vulnerabilities and resilience capabilities,” she says. What stands out to her across these cases is how differently two organisations can fare when hit by the exact same disruption, and why. “We often observe that two organisations facing the same disruption experience different outcomes. The differentiator is rarely the event itself, rather the quality of contingency planning, operational visibility, decision-making and preparedness,” Naveed says. That gap between outcomes is why she treats the events that never became claims as being just as instructive as the ones that did. “Understanding why losses did not occur can be just as informative as understanding why they did,” she says. A more strategic role for marine insurers Supply chains are growing more complex, climate pressures are building and geopolitical uncertainty remains high, and against that backdrop, both underwriters and claims specialists see an opportunity for insurers to offer more than balance sheet capacity. Whether from the underwriting side or the claims side, the key point is that proactive risk management can be effective. Naveed points to the direct effect that preparedness has on outcomes. “From a claims perspective, it reduces the likelihood and severity of loss,” she says. Hughes sees the same dynamic show up earlier, in how an exposure is underwritten in the first place. “From an underwriting perspective, resilience improves exposure quality,” he says. The future role for the marine insurer is one that goes well beyond capacity and into advising clients on strategy. “It involves helping clients understand how risk moves through interconnected systems, identifying hidden accumulations and building resilience before disruption occurs. Success will depend upon combining underwriting expertise, claims insights, data analytics and practical risk advisory capabilities,” says Hughes. Marine insurance is no longer about treating isolated symptoms. It is about ministering to the whole system.