Hull and Machinery Risk: How Technical Management and Execution Shape Outcomes

Hull and Machinery Risk: How Technical Management and Execution Shape Outcomes
June 23, 2026 9 mins

Hull and Machinery Risk: How Technical Management and Execution Shape Outcomes

Hull and Machinery Risk: How Technical Management and Execution Shape Outcomes

Global shipowners and operators face increasing complexity from geopolitical tensions, older fleets, volatile weather, crewing challenges and evolving regulations. Disciplined technical management is now more important to loss performance, resilience and long-term operating strength.

Key Takeaways
  1. A tougher operating environment is increasing the cost and severity of hull and machinery losses.
  2. Fires and machinery damage remain the leading drivers of major losses and claims costs in the sector.
  3. Effective technical management and consistent execution, supported by technology, strengthen loss performance, improve vessel reliability and support long-term resilience.

Commercial marine operators face a more demanding environment that's heavily influenced by geopolitical tension, aging tonnage, weather volatility, crewing pressure and regulatory complexity. That pressure is also reflected in rising claims severity and repair costs.

“We look at what is happening geographically and geopolitically, and those issues are only going to increase for operators with the price of steel, parts and moving parts around the world and replacement times,” says Andrew Green, Global Claims Leader, Transportation. “The price of repairing a vessel is at least 40% more expensive than it was four years ago.”

However, even in a more demanding environment, owners still have clear opportunities to strengthen resilience and drive positive change through robust technical management.

 

Impact of Fire and Machinery Damage

Fires and machinery damage remain dominant drivers of major hull and machinery losses.

  • Top 2

    From 2021-2025 machinery claims (41%) and fire/explosion claims (19%) were the top two loss cost drivers.

  • +$10M

    In the first half of 2025, four of the seven losses above $10 million were fire-related.

    Source: Cefor Mid-Year 2025 Report

Why Technical Management Matters 

Effective technical management plays a central role in reducing risk and building resilience for vessel owners. Day-to-day management, maintenance, operations and crew support shape better loss outcomes. Strong standards, systems and culture help strengthen:

  • Vessel condition
  • Machinery reliability
  • Crew performance, wellbeing and retention
  • Claims experience

Over time, stronger technical management standards reduce operational risk and support more consistent performance across the fleet.

How Owners Can Measure Performance and Act Early

Owners can reduce operational risk directly, or through technical managers, by using vessel condition and crew performance KPIs to pinpoint vulnerabilities and best practices.

This creates opportunities to address exposures early while identifying successful approaches that can be scaled across the fleet. 

“We see owners put more focus on understanding how effective their technical management partners are, including by developing their own data and KPIs to monitor safety and risk performance and identify areas for corrective action,” says Christopher Law, Managing Director, Marine Risk Engineering and Loss Control.

Using Risk Metrics to Drive Continuous Improvement 

Owners can track risk performance across a range of vessel and fleet-level indicators. The objective is to understand trends, maintain operating discipline and feed those insights back into continuous improvement:

  • Vessel Condition Inspections and Audits

    What gets tracked: Closure rates, repeat issues, severity and response times. Timely action helps to prevent minor issues from escalating. Most severe incidents stem from machinery and steering failures, often leading to accidents.2

  • Regulatory Documentation Compliance

    What gets tracked: Audit results and repeat findings per vessel or manager. Documentation quality can be a useful indicator of broader operating discipline and compliance risk.3

  • Port State Control History

    What gets tracked: Detention rates, deficiency types and repeat issues. Most detentions stem from safety management systems and fire safety; therefore, results can highlight recurring weaknesses and provide clear priorities for improvement and benchmarking.4

  • Crew Culture, Wellbeing and Safety Engagement
    What gets tracked: Near-miss reporting, good catches, closure quality, fatigue management and welfare inspection results. These indicators help assess whether crews are operating in a culture that supports safe escalation, recognizes positive safety contribution and promotes consistent standards.
  • Planned Maintenance Adherence
    What gets tracked: On-time job completion, overdue work, approved deferrals and recurring failures. Maintenance discipline is a core risk control, clearly shown in broader safety and regulatory performance outcomes.
  • Fitness for Carriage of Cargo
    What gets tracked: Inspection results, closure of cargo-related issues and compliance signals. The updated, digitized inspection regime, SIRE 2.0, has improved data quality, supporting stronger cargo fitness assurance and transparent reporting.5
  • Retention of Senior Officers
    What gets tracked: Turnover of senior crew, vacancy times and handover quality. Stable onboard leadership and smooth transitions promote consistency of fleet-wide safety and cultural standards. 
  • Living Standards and Housekeeping
    What gets tracked: Maritime Labour Convention deficiencies, accommodation, sanitation and complaint handling. Port State Control inspections link living standards to vessel condition and mariner wellbeing, making good housekeeping essential for compliance and safety.6

Survey Cycles and Lifecycle Management

Survey cycles are a stress test for technical management. As vessels age, hull and machinery outcomes depend on maintenance discipline, transparency around defects and timely capital investment.

Vessels subject to the International Convention for the Safety of Life at Sea are required to undergo a five-year survey cycle to ensure maintenance of class and flag regulatory condition and safety standards:

  • Annual survey every year assessing hull, machinery and equipment condition
  • Intermediate survey every 2.5 years involving more detailed physical inspection afloat
  • Special survey every five years to detail full vessel physical examination in dry dock

“Provided an owner budgets appropriately and takes the necessary steps to maintain a vessel in a safe and seaworthy condition, it can continue operating beyond the typical 20-25-year lifespan,” says Law.

Still, older tonnage features more heavily in severe losses. On vessels more than 25 years old, fire results in a total loss in roughly one in eight cases, compared to one in 30 on vessels under 20 years old.7 Good maintenance routines and loss prevention measures are key to prevent more severe damage in aging vessels.8    

Emerging Technologies: Enablers, Not Shortcuts

Emerging technologies are becoming an important part of how operators manage risk and improve visibility. 

When vessel owners invest in new technology to reduce risk, they often ask whether it will deliver an immediate premium benefit. “Typically, it does not,” says Law. “But sustained improvement in the hull and machinery loss record linked to that technology can, over time, create a compelling case to negotiate better renewal outcomes with underwriters.”

Adoption remains uneven, and outcomes still depend on how effectively these technologies are embedded into day-to-day technical management and operations.

5 Ways Emerging Technologies Can Strengthen Performance

  • 02
    Connected Vessels Improve Real-Time Oversight

    Ship-to-shore connectivity and onboard edge computing allow vessels to transmit, process and act on data in near real time. This overcomes traditional latency and bandwidth constraints, enabling faster decision making and continuous oversight from shore.

  • 03
    Predictive Insights Support Earlier Intervention

    Advanced analytics identify anomalies, component degradation and emerging failure patterns before breakdowns occur. This enhances maintenance from purely fixed schedules or failure response to preemptive condition-led intervention, reducing unplanned downtime and severe loss events.

  • 04
    Operational Analytics Support Better Decisions at Sea

    Voyage optimization and operational analytics enable real-time adjustments to routing, speed and fuel use. This allows operators to respond dynamically to weather conditions and performance signals, improving efficiency, reliability and cost control.

  • 05
    Digital Workflows Help Turn Insight into Action

    Digital tools translate insights into action through automated work orders, updated maintenance plans, integrated checklists and shore-side oversight. This closes the gap between data and execution, ensuring insights are consistently applied across fleets.

Leadership’s Impact on Crew and Culture

Senior officers play a decisive role in onboard condition, performance and safety standards and fostering an assertive culture.

“We’re seeing greater focus on how owners assess and invest in their most senior officers — the master, chief officer, chief engineer and second engineer — because they set the tone for how a vessel is operated and maintained, and for whether more junior crew feel able to raise safety concerns,” adds Law.

Safety culture, training, fatigue management and the ability to raise concerns directly affect hull and machinery outcomes. Further, human error-related claims are often not isolated events but can be symptoms of broader operational or cultural weakness.

Turning Execution into Longer-Term Market Confidence

Owners invest in effective technical management, performance data, crew skills, culture and capability, and technology first and foremost to reduce operational risk and run better ships, not to secure instant premium reductions.

The primary return on that investment is usually operational:

  • Higher reliability and availability, with fewer breakdowns and off hire days
  • Lower lifecycle costs through smarter maintenance and planned life extension budgeting
  • Better safety performance and regulatory compliance outcomes
  • Stronger crew engagement, retention, operational culture and safety engagement
  • Greater confidence in deploying vessels into more demanding trades or environments

Underwriters increasingly use granular data and performance signals, but technology or KPIs alone do not generate immediate discounts. Confidence is built through sustained improvement that is clearly articulated, supported by evidence and tied to stronger risk and loss performance over time.

Performance data is most valuable when it is first used to improve operating discipline and reduce risk; stronger market conversations will naturally follow.

Execution Remains the Decisive Differentiator 

In today’s hull and machinery environment, execution is the constant. Aging tonnage, heavier weather, longer routes, more complex machinery and ongoing crewing challenges are not temporary features — they are the operating reality.

Industry data highlights where the pressure points sit, but it is day‑to‑day execution that determines whether a fleet becomes part of the statistics or consistently performs ahead of them. 

Aon’s industry-leading global marine practice leverages a global network of professionals with deep knowledge of the hull and machinery sector. Learn more about how we can help you build resilience.

1 CEFOR, mid-year 2025 report
2 CEFOR, 2024 Ocean Hull Report
3 Port State Control in the United States, USCG
4 Port State Control in the United States, USCG
5 OCIMF Annual Report 2025
6 Paris MoU on Port State Control
7 Marine: Older Vessels are Increasing the Claims Risk, Insurance Edge
8 CEFOR, mid-year 2025 Hull Report

 
Aon’s Thought Leaders
  • Andrew Green
    Global Claims Leader, Transportation and Logistics
  • Christopher Law
    Managing Director, Marine Risk Engineering and Loss Control, United States
  • Oliver Miloschewsky
    Head of Shipping, Asia Pacific
  • Andrew Poulson
    Managing Director, Marine, United States
  • Ben Stone
    Global Head of Marine Hull, United Kingdom

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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