Premium increases as P&I Clubs react to deteriorating results
Amid strong competition and challenging commercial conditions, pricing remains under pressure ahead of the February 20 deadline for ship-owners' marine protection and indemnity (P&I) renewal, according to a new Market Segment Report from AM Best.
However, following three years when no increases were the norm, a large majority of P&I clubs have announced general increases for the 2020 renewal. This change in approach comes after most of them reported poor results for the year ending February 2019.
AM Best notes in the report, Premium Increases as P&I Clubs React to Deteriorating Results, that the level of general increases of between 2.5 percent and 7.5 percent is fairly modest given the underwriting loss reported in 2018/19.
“It is further noted that some clubs, in particular Gard, Britannia P&I and Skuld, are not applying a general increase this year,” stated AM Best. “Instead, premium rates and terms will be adjusted based on member specific information. The American Club is also taking this approach, but has cautioned that rates are likely to increase overall giving rising claims trends and lower investment prospects.”
The report also states that the accumulation of free reserves in recent years has strengthened clubs' overall risk-adjusted capitalisation but has also led to pressure to reduce prices.
