The upcoming Protection and Indemnity (P&I) renewal is poised to be the most challenging in a decade as a result of difficult economic conditions for ship operators, poor underwriting results and some of the largest claims in history, according to Willis Global Marine, a division of
The P&I market results last year (2011/12) showed a 13% increase in incurred claims, a 5.9% underwriting loss and only a 2.7% investment return. Total market free reserves increased marginally (4%) but tonnage increased by 9% over the same period. The market is therefore larger, but proportionately slightly weaker than the previous reporting period.
Against this backdrop, 2011/12 has the dubious honour of registering the highest level of net paid and net incurred claims ever reported by the P&I market (2% and 8% higher than the previous record level in 2009/10).
Added to that, 10 out of the 13 P&I clubs reported underwriting losses. On a financial year basis in 2011/12, the largest individual P&I club combined ratio was 120%, the lowest was 85%. Neither of these extremes of underwriting deficit or surplus (respectively) should be sustainable in a mutual environment.
“With pressure on all sides, the 2013 renewal will likely present some of the hardest fought negotiations since the turn of the century,” explained
“It is self-evident that ship operators are facing one of the most challenging economic periods in a generation. It is similarly obvious that the P&I market is not balancing its underwriting results. Added to this, the reinsurance market has been presented with the largest and third largest claims in the history of the
He continued: “In such a challenging renewal environment, the choice of specialist broker is critical to ensure that best value is achieved from this unique market.”
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