How New Marine Legislation is Reshaping Risk Management For Vessels and Cargo

In recent years, marine legislation reform has tackled a whole range of issues in the industry – from pollution control to crew welfare.

Along with these regulatory changes, companies who own and charter vessels are also having to consider the impacts of ongoing trade disputes and armed conflicts on their operations and activities. Add to this environmental compliance, and marine industry leaders and risks managers find themselves navigating a complex web of risks to remain competitive and operationally viable.

With the world’s geopolitical situation continuing to change rapidly and stricter climate policies in the wings, the cost of doing business at sea is expected to keep rising. In this article, Stephen Rudman, Head of Marine, Asia and Jason Mathews, Client Director, Australia, two experts from the AON Global Marine Practice, provide insights on three key challenges for 2025 and highlight how a strategic approach to risk mitigation and transfer can help companies better balance the costs and risks coming from policy changes around the world.

#1 Cost and risk trade-offs: sanctions and war hazards

With a rise in trade tensions between East and West and ongoing armed conflicts in the Middle East and Ukraine, global shipping routes are subject to a sharp increase in physical and compliance risks. As Stephen points out, vessels that breach sanctions will likely face severe financial consequences, including voided insurance policies and legal liabilities. “If you breach any of those sanctions, your policy becomes null and void,” he says. “When you’re a cargo or vessel owner, the exposure is in the millions of dollars.”

As trade tensions and sanctions escalate over time, this can introduce the threat of penalties for cargo voyages already underway. Rerouting comes with significant expenses, and this trade-off between risk and cost is also seen when choosing whether to avoid high-conflict areas such as the Red Sea. As Jason points out, insurers were initially reluctant to offer cover for war-affected territories, but are now bringing solutions to the table.

“Insurance markets, particularly in London, are providing cover for high-risk zones due to increased capacity and competition,” he says. “While last year there was heightened concern, this kind of risk is becoming business as usual.”

For risk managers the challenge is to determine whether they should invest in additional insurance coverage or absorb the costs of rerouting. Seeking expert guidance can help risk managers make a choice that best suits their circumstances and broader risk management strategy.

#2 A Fit-for-Purpose Fleet

With global trade volumes continuing to grow, many shipping companies are expanding their fleets. As Stephen points out, new vessel construction is often beset by delays and uncertainty. “Some clients have got five new builds happening every year for the next five years, growing their fleets as quickly as possible to capitalise on trade opportunities,” he says. “Some shipyards are booked out for years and specialised vessels require unique facilities, making the availability of new builds even more constrained. If you order now, you may not get a vessel until 2027 or later. This results in many companies holding onto older ships because new builds aren’t readily available.”

Stricter regulations across Asia and Europe mean that companies must ensure these older vessels comply with the latest safety and risk management requirements. Failure to do so could result in fines, penalties, and reputational damage. “Governments in Asia and Europe are implementing stricter safety regulations across the shipping and logistics sector,” says Stephen. “Companies must ensure their insurance and risk management strategies are aligned with their entire fleet inventory.”

#3 New Challenges from Carbon Emissions Legislation  

Environmental regulations are increasing scrutiny on marine greenhouse gas (GHG) emissions, adding another layer of complexity for shipowners as they determine how to go about planning and building a future-ready fleet and infrastructure. The International Maritime Organization (IMO) has introduced stricter emissions targets, aiming for net-zero greenhouse gas emissions from shipping by 2050, including ambitious milestones for emissions reduction in the next five, 10 and 25 years. Ship owners are required to achieve a minimum 20% reduction in total annual GHG emissions by 2030 compared to 2008 levels, rising to 70% by 2040.

These evolving regulations introduce uncertainties for shipowners who must ensure their vessels remain compliant across different jurisdictions. “The pace of climate-related regulation is not uniform across the globe,” says Stephen. “This presents a new challenge for organisations managing regulatory risk along international shipping routes.”

Shipping operators are also having to make changes to existing vessels to achieve compliance with current emissions targets. Since January 1, 2023, vessels registered in MARPOL signatory countries have been required to obtain an International Energy Efficiency Certificate (IEEC). Failure to comply could result in vessels being denied entry to ports or terminals. “Failure to obtain an IEEC could render a vessel technically ‘unseaworthy,’ leading to significant contractual and legal implications,” warns Stephen.

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Early intervention and monitoring for risk mitigation and transfer

In this increasingly complex environment, marine insurance brokers play a vital role in helping shipping companies manage risks effectively. “As brokers, we act as consultants to our clients, ensuring they have comprehensive cover for their vessels, crew, and trade routes,” says Jason. “We engage with markets across London, the Nordics, Japan, and Singapore to stay ahead of industry changes and provide tailored insurance solutions.”

Not only do the Aon team act on their clients’ behalf as insurance brokers, they also provide support  to shipping companies as they undertake risk assessments and proactive monitoring as part of their overall risk management strategy. Aon can analyse claims history, conduct risk modeling, and help companies implement strategies that improve their risk profile. This, in turn, allows them to secure better insurance terms and pricing.

“Each company’s risks are unique, so we tailor programs to their specific needs,” says Jason. “Aon has a large global marine practice, and we leverage our extensive network to provide solutions for clients worldwide. As specialists in risk management and insurance for the marine industry we play a crucial role in helping businesses adjust to these regulatory changes and secure continued coverage for better commercial and financial outcomes.”

Talk With Us 

If you would like to discuss your insurance needs, contact the marine team: 

Stephen Rudman | Head of Marine, Asia 

stephen.rudman@aon.com 

Jason Matthews | Client Director, Australia

jason.mathews@aon.com