LettersHong Kong has a chance to lead the world in marine underwriting

Hong Kong has a unique opportunity to become the natural home of next-generation marine insurance – if it chooses to seize it.

Today, almost all blue-water ship liability is still insured through a small group of traditional mutual protection and indemnity (P&I) clubs, many of them based in Europe. Their model was built for the age of steam. A dozen clubs collectively handle about 90 per cent of the world fleet’s liability claims, most of them low-severity operational incidents, leaving high-quality Asian operators effectively subsidising weaker fleets through a structure that prioritises claims processing over innovation, technology and competition.

Yet the geography of shipping has shifted. Asian shipowners now control the largest share of global tonnage and dominate the newbuilding order book. Nordic hull insurers have quietly overtaken London on ocean hull by using proactive claims handling and “increased value” covers to insure far more than basic hull. The question is where these trends should come together.

Hong Kong is the obvious answer. It combines a common-law system and deep maritime legal expertise with a growing maritime arbitration community and a world-class financial centre. A standard “subject to Hong Kong law and arbitration” clause would allow shipowners and financiers to retain the comfort of common law while anchoring disputes in Asia.

At the same time, Hong Kong sits at the centre of a region investing heavily in robotics, advanced manufacturing and the Internet of Things. Real-time monitoring of ships and yards will make rigid five-year surveys obsolete, enable extended yard warranties and reduce downtime and repair disputes. With the right regulatory and policy support, Hong Kong can marry Nordic-style hull practice, capital-markets solutions, AI-driven risk analytics and Asian ownership into a truly modern marine insurance hub physically led and controlled in Hong Kong.

The current situation in the Gulf also highlights the potential – and need – for radical change. Many do not appreciate that physical damage war-risk underwriters – often the same companies that write hull – insure war P&I or liabilities resulting from war up to an additional amount equal to the hull value, with the P&I clubs or providers only paying amounts in excess of the agreed war-risk value. In other words, the regular marine hull underwriter could also offer to insure the owner’s P&I liabilities as well as collision liabilities up to hull value, with the wider market only needing to provide excess cover for the very few truly catastrophic events. Such a shift would inject fresh thinking into a centuries-old approach rooted in past geopolitics and help catalyse a renaissance in marine risk financing centred on Hong Kong.