What lies ahead for Marine Insurance in 2026?

Singapore’s role as a leading maritime and logistics centre makes marine insurance essential to its trade operations. Throughout most of 2025, the industry has been facing a wave of challenges stemming from global political shifts, economic instability and changing trade regulations. These factors are reshaping the risk landscape for insurers, exporters and logistics firms operating in and through Singapore.

Trade Policy Shifts and Geopolitical Risks

A major concern is the impact of revised U.S. trade policies. Under the current administration’s protectionist stance, Singaporean goods entering the U.S. are now subject to a 10% tariff, reversing the duty-free status previously enjoyed under the U.S.-Singapore Free Trade Agreement. This change has led to increased operational costs, disrupted supply chains and stricter scrutiny of transshipment activities. In response, insurers have recalibrated their risk assessments and adjusted premium structures to account for the heightened exposure and complexity of shipping to tariff-affected destinations.

Concurrently, geopolitical tensions in regions like the Red Sea, Strait of Hormuz and Israel have significantly raised war-related insurance costs. Premiums for vessels navigating these high-risk areas have risen sharply, with some routes experiencing a threefold increase.  Talks of ceasefire have not turned around the situation, and premium rates are expected to stay high until stability returns to the region. 

Meanwhile, the maritime industry is dealing with challenges such as electronic interference, covert shipping operations and enforcement of international sanctions. Ongoing conflicts, including the Russia-Ukraine war and disputes in the South China Sea, have led insurers to revise coverage terms and exclude certain high-risk zones from standard policies.

Operational Strains and Market Volatility

Beyond geopolitical risks, operational pressures and market volatility have added another layer of complexity for insurers and clients alike. Rising inflation, unpredictable freight rates and persistent supply chain disruptions have driven up claims costs and led to stricter underwriting practices. Insurers with a global network of support services and those who prioritise efficient claims cost management will stand apart from competition, by ensuring more equitable outcomes for their clients. 

With economic uncertainties, it is also reshaping shipping practices, driving the trend towards shipment consolidation and stockpiling to mitigate against tariff impacts. These conditions have affected insured values and risks in warehousing. Insurers offering annual transit and inland coverage can help businesses to better safeguard their goods across both international and domestic distribution. This comprehensive protection is especially vital in today’s environment, where cargo is often held longer and in larger volumes.

Trade Outlook and Growth Drivers for 2026

Despite the late October U.S.-China trade truce, shippers are expected to continue drawing down on previously frontloaded inventories well into early 2026 to protect their supply chains. 

The WTO has revised its global trade growth forecast to just 0.5% for 2026, down from 1.8% forecasted in August 2025, signaling a challenging outlook. Asia, however, is projected to show relative resilience, with sectors such as semiconductors and AI-related goods driving incremental growth.¹

Production and outsourcing shifts to Asia will continue to strengthen intra-regional trade, supporting shipping revenues and sustaining demand for marine insurance. Yet, the growing fragmentation of global trade means 2026 will be a pivotal year, bringing both risks and prospects for insurers to refine underwriting strategies and risk assessments.

This article is contributed by Cao Yueming, Head of Marine Business Development, MSIG Singapore

¹https://www.channelnewsasia.com/business/world-trade-organization-downgrades-global-trade-growth-forecast-5388336