The reflections in this article are drawn from my recent presentation at the 2025 Risk-In Conference in Zurich, where I had the opportunity to explore the complex and evolving intersection between decarbonization, marine operations and insurance. The topic—“Decarbonization across Industries: Challenges, Opportunities and Insurance Implications, with a Focus on the Cruising Sector”—sparked an engaging dialogue with risk professionals, underwriters and corporate leaders. This piece expands on those insights, with the hope of contributing to the broader conversation now underway across our industry.
The global push for decarbonization is reshaping the way industries operate and shipping is no exception. The cruising sector, in particular, sits at the intersection of heavy regulation, rapid technological innovation and rising public expectations. These pressures are generating not only operational and strategic challenges but also a wave of new risks that require insurers to rethink how they assess and support the industry.
In recent years, regulators have accelerated efforts to drive down emissions in maritime transport. The revised 2023 IMO GHG Strategy sets clear targets and timelines. The FuelEU Maritime Directive, introduced as part of the EU’s Fit for 55 package, further tightens requirements around alternative fuels and lifecycle emissions reporting. These frameworks are binding and directly influence vessel design, fuel selection and operational choices.
Technology Meets Risk
Decarbonizing ships is not as straightforward as just switching to cleaner fuels. LNG could be considered as a “fuel in transition”, with some decarbonization potential already in its fossil form and much greater potential in bio and synthetic forms. However, it also has some drawbacks—larger storage requirements, supply chain vulnerabilities, availability and costs of renewable LNG and methane slip. Other potential future fuels, such as methanol, ammonia and liquid hydrogen, are potentially promising but face technical and safety challenges, as well as very limited availability and high costs. Moreover, innovations like fuel cells and carbon capture systems are still in developmental stages and raise new operational and insurance questions.
For insurers, these changes introduce new dimensions of risk. Vessels using dual-fuel systems or prototypes powered by non-traditional energy sources may not fall within existing underwriting models. Considerations around salvage, liability, regulatory compliance and asset valuation need to be re-examined.
The Role of the Insurance Industry
The path to net zero demands not just risk coverage but active collaboration across the entire marine ecosystem
The insurance sector must evolve alongside the industries it serves. This means not only responding to risk but anticipating it by supporting clients through tailored coverage, proactive risk management services and underwriting philosophies aligned with the transition to net zero.
This shift is particularly relevant for small and mid-sized operators, who often lack the capital and expertise of larger players. Without adequate support, they risk falling behind or exiting the market altogether, potentially driving further consolidation. A more inclusive and pragmatic insurance approach can help bridge this gap and encourage broader sectoral alignment with climate goals.
Voluntary Frameworks: The Poseidon Principles
While regulations like IMO and FuelEU are mandatory, the Poseidon Principles represent a voluntary initiative developed by financial institutions and marine insurers. Originally launched by major lenders to align ship finance portfolios with climate objectives, the insurance arm of the Poseidon Principles builds on the same methodology, measuring the carbon intensity of insured fleets against decarbonization trajectories.
The adoption of these principles by insurers is not required by law. However, they signal a broader movement within the industry to embrace climate accountability, transparency and standardization. These frameworks offer practical tools for integrating ESG factors into underwriting, but they also raise critical questions.
In the April 2025 Poseidon
Principles annual report, both signatory banks and insurers reported that their portfolios had not, on average, met the decarbonization alignment targets. This shortfall prompts reflection: is the sector lagging in its transition—or are there structural issues with the way performance is being measured? Are the indexes and methodologies—such as the well-to-wake CO2-equivalent emissions metric—truly suited to the operational realities of global shipping? As these voluntary frameworks mature, aligning intention with implementation will be crucial. Metrics must not only be rigorous but also practical and adaptable to the technological diversity and transitional pace of the industry.
More importantly, for the insurance community, it remains unclear how these insights will concretely influence underwriting behavior. Will insurers raise premiums for clients with poor emissions profiles? Will they restrict capacity or decline to cover certain types of vessels altogether? As of now, the Insurance industry has not communicated a uniform approach and the actual consequences for insureds are still evolving. What is clear, however, is that greater transparency is needed on how environmental performance will be priced into risk.
Collaboration Will Be Key
The road to net zero will not be a linear one. It will take decades and progress will vary widely between regions and vessel types. This makes collaboration essential. Ship owners, regulators, technology developers, insurers, brokers and financial institutions must align—not just in principle but in practice.
Insurance has a critical role to play. By fostering innovation, supporting loss prevention and facilitating responsible investment in sustainable technologies, insurers can act as both enablers and accelerators of change. Risk-sharing must be paired with knowledge-sharing and underwriting must evolve from a backward-looking assessment to a forward-looking partnership.
There is no single solution to decarbonizing the cruising industry. But there is a clear path: innovation, collaboration and leadership. For insurers, the challenge is not only to keep pace but to help steer the course.
