Executive Summary (View full paper here)
After roughly seven years of remediation that took rates, terms and underwriting discipline from a state of acute stress in 2018 to one of the most profitable runs the London market has seen this century, the marine insurance market has entered a soft phase.
Rates are largely trending down, capacity is expanding, terms are loosening and the balance of negotiating leverage has shifted toward the buyer for the first time since the pre-pandemic period. This report sets out where the market is, how it got here and, most importantly, why insureds and their brokers should be acting now rather than waiting.
If prior market cycles are anything to go by, the current window will not last. Soft markets historically run two to three years before the next loss event - capacity withdrawal or reinsurance correction reverses them. The Lloyd’s market booked an aggregate price reduction of 3.7% across all classes in 2025; the first negative number since the soft phase that ended around 2017 and with marine hull moving faster than the average. New entrants, MGAs and United States domestic carriers are deploying capacity aggressively into a class that has, until very recently, been hard to access. This combination of conditions has created a finite buyer’s window. The question is: how long will it last?
What the 15-year record shows
The Lloyd’s market overall posted a profitable 2025 with a combined ratio of 87.6%, capping its third consecutive year of strong underwriting performance. But the long view tells a more important story: between 2017 and 2020, Lloyd’s was loss-making four years in a row, with combined ratios of 114%, 104.5%, 102.1% and 110.3% respectively. What followed was a remediation programme (known as the ‘Decile 10’ review) that required every syndicate to identify the worst performing 10% of its premium and submit a credible
plan to remediate or exit it, on pain of having its Syndicate Business Plan rejected. This process saw a number of markets exit those classes and drove the rate increases that produced the recent profit run.
Marine specifically endured a longer remediation. Lloyd’s Marine, Aviation & Transport (MAT) line carried combined ratios of 113.3% in 2018 and 106% in 2019, before returning to underwriting profit overall between 2020 and 2022 (even with COVID-19 and Hurricane Ida) following the Decile-10 process. The period 2022 to now has been distorted by Russia-Ukraine aviation reserves, followed by the Dali/Baltimore bridge claim, with the line pushed back to a 104.3% combined ratio in 2024. The 2024/25 picture reflects continued stress, but interestingly, the underlying technical position is materially better than the late 2010s. The new capacity that has now arrived is benefitting from that improved technical picture with, typically, no legacy exposure to the market events of the past five years.
What is happening now?
The marine market is, generally, seeing downward pressure on rates. A snapshot of individual markets shows that hull and machinery rates in London are reducing up to 10% on blue water tonnage, with brown water following the same trajectory. Ports and terminals, a class that was still pushing for increases at the end of 2024, has flipped within twelve months, with property reductions of 10% and liability reductions of up to 5% being normal on the best accounts. Marine liability is the lone outlier still pushing for increases, weighed down by Dali, social inflation and U.S. nuclear verdict exposure, but even there the pace of increase has slowed and clean accounts are renewing close to flat.
This is all at a time when combined ratios are starting to creep back up. The below report highlights the overall figures, but a summary of the last three years in particular shows that the MAT Combined Ratio is running, on average, around 16 percentage points worse than Lloyd’s overall over the same period. This is why the message in this report is to take advantage of the buyer’s window while it is here.
One exception to this is the mutual P&I clubs, which sit in their own category. Their 15-year story is one of structural improvement: from chronic losses and
weak free reserves a decade ago to record-high free reserves heading into 2025, supported by strong investment returns and five consecutive years of general increases. The Dali/Baltimore bridge claim is being absorbed by the International Group’s reinsurance structure without disrupting the mutual model, even on the back of the reserve moving out to USD 2.8bn which, by all accounts, would make it the largest marine loss in history. This is a comment on structure rather than profitability, though. The technical picture deteriorated sharply in 2024/25: after running at a financial-year combined ratio of approximately 96% in 2023/24, the IG-wide 2024/25 result climbed to close to 110% on a financial-year basis and approximately 120% on a pure policy-year basis, driven largely by record pool claims activity.
Fixed-premium P&I, run by commercial carriers, has grown materially over the period and is something to watch as the traditional markets respond to soft market cycles more aggressively than their mutual counterparts. A specific area of interest is the increasing number of markets offering to write this business on a primary and excess basis for US insureds. Traditionally, this was the preserve of specialist MGAs and a small part of what the P&I Clubs would do, but it is now very common for Lloyd’s and London markets to offer fixed options that sit below an insured’s Umbrella policy. This approach can be very successful but it best suited to small-to-mid tonnage.
In summary, the soft market conditions are clearly present in the marine market and you should be prepared to take advantage of this buyer’s window. The headwinds that typically end this phase, such as a major insured loss, a reinsurance correction or a rapid capacity withdrawal are not yet present but they are on the horizon.
Why the window matters now?
Hull, ports and cargo: Capacity is at multi-year highs and underwriters are competing for top-line growth. Long-term agreements, profit-sharing structures and broader wordings are being offered to retain or win business. Buyers should treat 2026 renewals as a structural opportunity.
P&I: The mutuals are in their strongest balance
sheet position in over a decade, but the 2026/27 renewal will reflect the cumulative weight of large pool claims. Buyers should expect modest general increases offset, in many cases, by capital distributions from better performing clubs.
War: The 2026 Iran conflict has fundamentally repriced Persian Gulf and Strait of Hormuz exposures. War risk premiums that stood at 0.25% of vessel value pre-conflict have reached as high as 10%. This is a separate cycle running on its own clock and will not be resolved by the soft cycle in the underlying classes.
Reinsurance: The mid-year and 1/1 reinsurance renewals were uneventful in 2025. Should that change at 1/1 2027, driven by U.S. catastrophe losses, the Hormuz/Iran exposure or a single large marine loss, the soft phase in the primary market will end. Buyers who have not used the current window will find themselves negotiating from a weaker position.
Recommended actions
• Move renewals forward. Begin the 2026/27 renewal process 90–120 days before expiry.
• Test the long-term agreement option on hull, where 18 and 24-month terms are being offered.
• Pressure-test broader wordings. Ask underwriters to remove restrictive clauses imposed during th hard market and benchmark against current peer terms.
• On P&I, evaluate club-by-club performance. Free reserves, Standard & Poors ratings, capital distribution policies and pool claim performance vary substantially between clubs.
• Watch the reinsurance cycle. The 1/1 2027 treaty renewal is the most important leading indicator for whether the current soft phase continues. Monitor Q3/Q4 2026 reinsurance commentary closely.
• Watch for the tripwires: Section six identifies five specific tripwires that should challenge the central thesis of this report.
The body of this report sets out the evidence behind these conclusions in detail. It is structured to give the buyer a basis for capital and risk decisions, and the retail broker or risk manager a working knowledge of what the wholesale market is doing and why. A unified source list appears at the end.
SCOPE AND USE
This report combines factual market data with the author’s analytical interpretation of it. Quoted figures, attributed statistics and dated events are factual; statements about market direction, the durability of the soft phase, the timing of an inflection point, and the appropriate buyer response, including those in the Executive Summary, pull-quote callouts, the recommendations in Section six and the closing “final view”, are judgements held with conviction but not with certainty. The closing disclaimer covers the report’s general informational status and the limits of its use.
