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Post-pandemic machinery-related losses have become an even more significant issue. Mechanical failures can undermine vessel safety, operational integrity, regulatory compliance, reputation, and even financial stability.

The data shows both the frequency and cost of machinery claims are at an elevated level from the pandemic onwards. For average claims above US$10,000, the average machinery claim cost reached around US$400,000 in 2020 and has generally remained at or above that level since, according to The Nordic Association of Marine Insurers’ 2024 mid-year hull report.

The report also indicates that large machinery claims above US$500,000 reached about 1% of vessels in 2019 and have since stayed near or above that level.

Typical machinery claims are propellers, shafts, steering gear, and deck equipment. Given the sustained elevation in both frequency and cost, identifying the causes of machinery losses is essential.

Shipowners should know how to act to mitigate the risk and contain insurance costs.

Causes of machinery losses

There are several reasons explaining the elevated costs and frequency of machinery losses. The pandemic caused a global supply chain disruption, delaying engine parts and key components and thus increasing vessel material costs.

Along with higher commodity prices and labour shortages, there is evidence that this has helped inflate machinery damage claims since the pandemic.

When ports finally reopened, there was a desire to get idle vessels back to sea as quickly as possible.

There was an impetus to recover lost revenue. The general downturn in the global economy during the pandemic, as well as restrictions imposed by governments, led to international maritime trade volumes falling by 3.8% in 2020, according to the United Nations
Conference on Trade and Development.

Operators and owners, keen to benefit from favourable market conditions when operations resumed, prioritised profit over the necessary downtime for maintenance.

Postponement and delays were common. When vessels were sent to shipyards for maintenance and repairs, busy schedules often led to recommendations to repair only essential work or defer maintenance unless critical. This was not without consequences.

Many insurers later found that engine breakdowns had resulted from using parts past their recommended lifespan. These include examples of nuts and bolts being used beyond the manufacturer’s recommendation, making them more likely to fail.

Another issue was parts that were already worn out but still in use. Issues like these can be small in isolation, but in combination, they can potentially lead to significant engine failure.

Crew problems

Another important factor in explaining the losses derives from issues with the vessel crew. Crews spent extended periods at sea during the pandemic.

In September 2020, 400,000 seafarers were stranded at sea, and another 400,000 were unable to join ships, according to estimates from the International Marine Organization.

Being at sea for extended periods can lead to mental and physical fatigue, which increases the likelihood of negligence or lapses in attention when it comes to vessel maintenance and inspection.

“The next major developments impacting machinery will come from technological advancements, particularly those that can address the root causes of the pandemic-related surge in machinery failures.” 

The Asia Pacific Economic Co-operation’s report detailing the impact of Covid on the maritime industry, released in June 2024, notes that seafarers stranded on ships were often operating well beyond the 11-month maximum period of service on board, set out in the Maritime Labour Convention, the seafarers’ bill of rights for acceptable work conditions. It notes that many seafarers needed medical care, including mental health support.

The report highlights that mental and physical strain was worsened by the inconsistent distribution of vaccines, despite the heightened need for them due to crew members working in confined spaces on board vessels.

Another major crew issue resulting from Covid was a growing gap in crew experience.

During the pandemic, many crew members returned to their home countries and did not come back. This led to less experienced crews being onboard. Although certified, their lack of practical experience made them less aware of when issues were likely to cause problems.

Insurers taking action

Insurers are taking decisive action to manage industry risks. If a particular account or vessel type consistently suffers machinery-related damages, insurers commonly introduce an additional machinery deductible to encourage shipowners to be equally responsible in managing machinery-type losses through risk management.

Whilst one may see insurers’ introduction of additional deductibles to protect their own interest, insurers are not stopping there, and some have extended their in-house risk engineers to assist their clients.

The risk engineers often work with external, third-party risk engineers who are well-positioned to offer valuable advice on upkeep and maintenance.

In a “win-win” for both parties, insurers offer risk management surveys to help owners identify potential areas of improvement.

Future-proofing the maritime industry

The next major developments impacting machinery will come from technological advancements, particularly those that can address the root causes of the pandemic-related surge in machinery failures. Specifically, vessels designed or modified for decarbonisation are now using new fuels and technologies.

For example, vessels now have advanced sensors connected to engines to monitor parameters like vibration, temperature, oil quality, and pressure in real-time.

AI-driven analytics analyse the data to predict potential failures before they happen, allowing for timely maintenance.

While some major companies are pursuing innovations, many owners remain cautious. Engine overhauls and retrofitting are expensive.

Therefore, owners are hesitant, especially those who believe it is unclear whether new fuels will achieve widespread adoption backed by clear regulation.

Staying ahead

In summary, the maritime industry is experiencing an elevated level in both the cost and frequency of machinery losses; however, there are measures available to help reduce these risks.

These include working closely with insurers to understand the risks, taking a cautious approach to maintenance reductions, and potentially embracing modern technologies.

The pandemic’s ongoing effects are still impacting claims, highlighting the importance of prompt action rather than delay.

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Until recently, nuclear energy in Asia was largely the domain of India, China and Japan.

Today, momentum is building across the region: Indonesia, Vietnam, Philippines, Malaysia and Thailand are among those actively planning or studying how they can bring nuclear power into their energy mixes.

Even land-scarce Singapore, which once ruled out nuclear, has invested SG$66 million into setting up a nuclear research centre. Visiting the island-state in August 2025, the International Atomic Energy Agency’s chief remarked that Singapore’s strong technical capabilities put it in a position to deploy nuclear power in a few years if it decides to proceed.

Asia’s commitment to nuclear energy has fluctuated over the decades, influenced by factors such as government support, energy security and public opinion – especially after events like Japan’s 2011 Fukushima disaster.

Japan, once intent on phasing out nuclear, is now seeing broad cross-party backing and has restarted 14 reactors since the disaster.

In July, Kansai Electric Power announced it will begin studying plans for a new nuclear power reactor – the first such initiative since the incident.

Recent events have compelled Asia to reassess the role of nuclear power in their energy mix.

Governments are grappling with the real-world challenges of achieving net-zero emissions while maintaining reliable energy supplies.

The cost concerns are also significant, as evidenced by the spike in global energy prices triggered by Russia’s invasion of Ukraine, which has resulted in rising gasoline and electricity bills that are weighing heavily on households.

This has exposed the vulnerability of countries that rely heavily on imported resources.

However, the biggest driver of nuclear expansion in Asia is the massive increase in power demand from data centres, which are essential for the growth of artificial intelligence (AI).

It is estimated that a typical AI-focused data centre consumes as much electricity as 100,000 homes.

The chip industry, closely tied to the data centre sector, is also driving demand for nuclear power. Taiwan, home to the world’s largest chipmaker, TSMC, celebrated its “nuclear-free homeland” in May this year after shutting down its last operational nuclear reactor.

Yet shortly after, authorities passed an opposition-backed proposal to hold a referendum in August to decide whether to restart the plant.

Big tech companies are investing heavily in energy-hungry data centres across Asia, with many, including Amazon, Microsoft and Google, having to tap into clean energy to power these facilities and achieve their decarbonisation commitments.

Nuclear power, providing stable, low-carbon baseload generation, is being considered as a key enabler alongside intermittent renewables.

The SMR revolution

The nuclear renaissance will look different to the nuclear we see today.

Gigawatt-scale, bespoke power plants will continue to play their role, with around 70 new nuclear reactors under construction globally, with around 100 more planned, the majority of which are in Asia.

The real transformation, however, will be driven by small modular reactor (SMR) technology.

SMR’s promise scalable manufacturing, lower costs, and shorter build times, making them attractive for emerging markets.

In 2024, the US Department of Energy began government-to-government talks on SMRs with the Philippines, Singapore, and Thailand; the Philippines has set a target for its first nuclear plant to operate by 2032 and is in active cooperation with international partners.

SMRs are advancing globally: Canada’s first commercial SMR at Darlington is set for 2028, and similar deployments are scheduled in the US and Europe by early next decade. What’s clear is that while SMRs are still emerging tech, they’re no longer theoretical – they’re being built, financed and, in some places, already delivering power.

However, regulatory harmonisation remains a challenge and with the likely development of multiple SMR models, cross-border regulation may prove challenging.

The other key component to the nuclear renaissance will be in the form of nuclear fusion.

If commercialised, fusion holds the promise of clean energy without the waste and risk profiles associated with today’s fission reactors. But while prototype fusion reactors exist, scientists haven’t yet generated sustainable electrical power with them. That breakthrough could be only five years away – or as long as 30 years.

Supporting nuclear development

The nuclear industry’s safety record has improved immensely in recent decades, with highly stringent engineering standards and strong regulatory oversight now making it the second safest form of power after solar and the cleanest form of energy production.

The insurance sector is poised to play a central and enabling role in Asia’s nuclear expansion.

As countries in the region move from exploration to active planning and construction – especially with a focus on SMRs – they will require innovative risk transfer solutions.

These solutions are critical to attract investment, satisfy evolving regulatory requirements, and build public confidence in nuclear projects.

Nuclear liability coverage for SMRs is yet to be determined by international conventions, and therefore the limits and requirements provided by Insurers are still to be realised.

Given Asia’s diverse regulatory environments and the variety of emerging nuclear technologies being considered, insurers will need to craft flexible products that can respond to new operational risks and cross-border considerations.

Now is the time for the commercial insurance market to lead with purpose.

By collaborating with governments, nuclear operators and sector experts, insurers can innovate new products, expand capacity and can cement their place at the heart of a safe, resilient and sustainable future.

This cooperation will be essential to underpin a safe, resilient, and sustainable nuclear renaissance in Asia, supporting the region’s clean energy transition and energy security goals.

Clifford Blayney is head of power and offshore sustainable energy for Markel International

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