How AI, IoT, and Geopolitics Are Reshaping Cargo Insurance

Expert Talk: How Cargo Insurance Is Changing with AI, IoT, and Geopolitics

Economic volatility, geopolitical tension, and climate risk are hitting logistics at the same time. To get a clear view of how the cargo insurance market is adapting, we spoke with Patrizia Kern-Ferretti, Chief Insurance Officer at Breeze AI. Below is a distilled readout for insurance professionals focused on underwriting, product, and claims.

Market Snapshot: 2024-2032

Global marine cargo premiums reached $22.64B in 2024, up 1.6% YoY. The market is projected to grow at ~4.1% CAGR to $106B by 2032.

Regional mix: Europe ~37.68% of premiums (scale and regulation), while Asia-Pacific ~35.15% is the fastest-growing region, driven by e-commerce and intra-regional trade.

What's Driving Pricing: Geopolitics, Inflation, Climate

Conflict-related rerouting and exposure-particularly from the Red Sea crisis and the Ukraine war-are lifting premiums in high-risk corridors. Underwriting controls are tightening, as discussed at IUMI's 2025 conference.

Inflation pushes claim severity. Climate-linked events like floods are prompting closer environmental risk reviews and stricter terms.

Coverage Fundamentals-And Where Gaps Hide

Common covered perils: fire, explosion, collision, sinking, stranding, storm, theft, piracy, and mishandling (including loading/unloading). Coverage typically extends to general average and salvage costs.

Frequent exclusions: inherent vice, ordinary leakage, delay, war, strikes, and cyber-unless added via endorsements.

Notable shifts: a rise in fire incidents tied to lithium-ion batteries and EVs, a surge in cargo theft, more flood-related damage, and a higher rate of physical and cyber attacks (including ransomware).

Claims Patterns You Should Price For

• Damage from poor handling, packing, or stowage
• Wet damage from flooding or condensation
• Reefer failures leading to spoilage-especially pharmaceuticals and perishables
• Theft of electronics and other high-value goods
• Fires linked to lithium batteries

Data points: Spoilage risks account for ~25% of all claims. Theft and fire incidents linked to lithium batteries and EVs represent ~18% of claim value.

Where Demand Is Moving

• Reefer coverage for temperature-sensitive goods (pharma, food)
• Hazardous goods insurance for lithium batteries under tighter rules
• High-value goods protection (electronics, EVs) to address theft and fire
• Parametric policies for time-sensitive shipments with fast weather-triggered payouts

AI, IoT, and Digital Rails: Practical Impact

• AI accelerates underwriting, sharpens risk selection with predictive models, and trims claims handling costs.
• IoT sensors enable real-time temperature, shock, humidity, and location monitoring for both dry and reefer cargo-cutting spoilage, theft, and late discovery.
• Blockchain supports smart contracts for parametric payouts and enables embedded insurance, reducing underinsurance by placing cover directly in logistics workflows (e.g., platforms used by Willis and Breeze).

Regulatory tailwinds: IMDG Code updates (due 2026), the EU Cyber Resilience Act (rollout into 2026-2027), GDPR expansions, and EU CBAM will raise compliance thresholds and intensify environmental and cyber risk assessments. For ongoing market analysis, see IUMI.

Looking 5-10 Years Out

Expect more parametric insurance that uses real-time IoT data (temperature, location) for faster, objective payouts. Sustainability-linked pricing will grow, including premium credits for low-carbon and compliant practices, as referenced by IUMI's 2025 stats and McKinsey's work on decarbonizing P&C claims.

The market could reach $106B by 2032. InsurTech distribution and embedded insurance will scale further-premiums in the broader embedded market are rising from $119.16B (2024) to $143.88B (2025). The Hapag-Lloyd and Breeze collaboration on Cargo Shield signals how liability extensions can be packaged at the point of booking.

Plain-English Definitions

Ransomware: A cyberattack that locks or encrypts systems/data and demands payment to restore access. In shipping, it can freeze vessel systems, cargo data, or port ops-delaying sailings and obstructing tracking or handovers.

InsurTech: The use of data, automation, and digital platforms to make insurance faster and more efficient-from underwriting and pricing to policy issuance and claims.

Advice You Can Give Clients Today

• Run regular risk assessments and use the findings to select the right form: all-risk, specified perils, or parametric add-ons for weather and delay.
• Embed cargo insurance in TMS or booking flows to avoid gaps and speed evidence collection.
• Use endorsements for war, strikes, and cyber; clarify triggers and exclusions up front.
• For lithium batteries: verify packaging, SoC limits, stowage plans, and IMDG compliance before binding.
• For reefers: require sensor data access and documented pre-trip inspections; apply credits for continuous monitoring.

Misconceptions to Correct

• "My forwarder's liability covers my cargo." It doesn't. Carrier/forwarder liability is limited by convention and often amounts to only a small fraction of the shipment value.
• "All risks are automatically covered." They aren't. War, strikes, and cyber usually require buy-backs. Per-shipment cover at booking helps secure the right terms.

Operational Moves for Insurers and Brokers

• Deploy AI triage to segment claims; straight-through processing for low-severity, high-frequency claims.
• Build parametric triggers for port closures, transit delays, and reefer excursions; wire payouts via smart contracts.
• Offer premium credits for verified IoT telemetry; apply surcharges or deductibles where data is missing.
• Adjust corridors exposed to Red Sea/Black Sea with rerouting clauses and higher deductibles where warranted.
• Train front-line teams to explain liability limits and the value of per-shipment cover in plain language.

Further reading and tools:

• International Union of Marine Insurance (IUMI)
• EU Cyber Resilience Act
• AI courses by job: upskill underwriting and claims teams