Marine

Written by William Jones

Key developments in 2025

Sanctions (and attempts to evade them) remained a central theme in 2025.  There has been a sharp rise in ‘flag-hopping’ – the repeat re-registering of vessels under different flags. While some flag changes may have legitimate operational drivers, frequent reflagging could be an indication of something more nefarious (e.g., the concealment of sanctioned cargo) and can raise enforcement risks.

Lloyds List report that of the vessels that were subject to sanction this year, over 70% had been reflagged, more than 20% had reflagged twice, and 7% had reflagged three times or more.  The scale of these "shadow fleets" is worth noting, with Al Jazeera estimating that around 20% of global oil tanker capacity is held by shadow vessels.

For marine insurers, the risk environment is increasingly complex, particularly when flag changes or designations occur mid‑policy.  Frequent reflagging without legitimate reason, combined with opaque ownership and control, has the potential to fundamentally alter the risk originally underwritten.

Sanction risk aside, flag hopping raises additional and indirect risks in the context of insurance claims.  Certain registries may provide weaker oversight such that minimal crewing or maintenance standards are tolerated, thus increasing the risk of claims.  When those claims do arise, the less desirable flags are likely to undertake inadequate investigations and/or prejudice insurers' position by hindering loss mitigation efforts with delays, limited technical expertise, and inadequate documentation. 

In these politically turbulent times, it is imperative that insurers take protective steps, at placement, to mitigate the risks associated with flag-hopping.  From a due-diligence perspective, these steps might include the vetting of the declared flag (e.g. its PSC list status/ implementation of key IMO instruments etc), the owner/ charterer, and the vessel (e.g. detention history, class recommendations, trading pattern etc.).  As concerns wording protections, insurers may wish to include – for example – warranties or condition precedents requiring insurer consent for flag-change, a "class maintained" warranty, and a robust sanctions clause.

What to look out for in 2026

During 2026 we expect to see a continued focus on the risks posed by the maritime transportation of lithium-ion batteries – including those used in Electric Vehicles ("EVs").  In addition to being a potential catalyst for fire/ explosion themselves, lithium-ion batteries can also aggravate existing fires, making them harder to manage. 

An example of this was the loss of the car-carrier Morning Midas - the cargo of which included ~750 EVs.  Whilst the cause of the loss has not been definitively identified, it is noteworthy that the fire burned for 21 days before the vessel ultimately sank.   The incidence of fires on carriers is, obviously, not a new phenomenon – but the severity of the EV fires (and the challenges of tackling those fires) is significant.

Whilst regulators have sought to tackle the risks posed by EVs through more stringent requirements concerning cargo identification, packaging, and inspection, the marine insurance market will also need to mitigate its own management of and exposure to this peril.

The various tools available to underwriters might include strict exclusions, exclusions referable to compliance with manufacturers' guidelines/ warranties, conditions precedent concerning cargo inspection and documentation, broader obligations concerning the carrier's safety measures/ fire-detection systems, and higher deductibles for lithium-ion battery cargo.
 
What is clear, however, is that with an increasing number of EVs subject to maritime transportation, and the severity of the potential losses at sea, we anticipate that lithium-ion batteries will remain front-of-mind for marine/ marine cargo underwriters during 2026 (and beyond).