American Club targets 7.5% P&I premium hike pre-reinsurance for 2024

The  American Club mutual P&I insurance group will ask members to pony up an additional target 7.5% for 2024 coverage, even before eventual adjustment for reinsurance cost.

“Premium pricing is still in need of upward adjustment to appropriately meet the realities of the current global risk environment and attain overall pricing adequacy,” management said.

Inflation and “developing trends in the claims environment” necessitate the move, management said.

That pricing need comes despite a “significant” improvement in 2023 results to an estimated 95% combined ratio, but with deficits lingering on prior years 2020-22.

Individual rate moves will be member-specific, based on individual loss records and trade and operational profile, but with a “target increase in the pricing of risk of 7.5%” on expiring rates overall for all classes of the Club’s business.

The component of premium represented by the Club’s International Group reinsurance arrangements for 2024 will be adjusted “separately and additionally” as will any uplift in the cost of the Club’s own whole-account reinsurances, management noted.

The decision “will not be welcome” among members, but the club “remains resolute in its commitment to consolidate the financial standing of the Club,” management said of its decision.

Word from the American Club P&I follows similar announcements from rival shipowner P&I clubs. London Club matched the Americans with a 7.5% target. Britania cited a 7.5% target for P&I and 15% for FD&D covers. Gard, Shipowners and Steamship said 5% across the board plus individual assessments.

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