Claims trends and data drive P&I renewals

In protection and indemnity (P&I) reinsurance, the balance is fragile, but one truth is clear: the best data wins. That is the message from Jason Cudlipp, P&I reinsurance practice leader at Gallagher Re, who described the sector as operating in a “fragile equilibrium”. The biggest differentiator is the strength and quality of the information cedants can provide.

Key points:
Data drives reinsurance differentiation
Capacity stable with slight buyer tilt
Perceived claims inflation remains core challenge

“The currency of reinsurance is data, and if you can supply the best possible data to your reinsurers via the best possible broker, you’re going to be differentiated in the market,” Cudlipp explained. Increasingly, this is the organising principle for renewal outcomes and access to capacity.

Cudlipp explained how the Baltimore bridge collapse in March 2024 temporarily hardened the P&I reinsurance market, with reinsurers pushing for higher rates. “From a category perspective however, we saw that the macro reinsurance landscape was going to be softer than the cedants expected,” he recalled. 

“The macro environment is leaning slightly more towards the buyers.” 

“Those aspirations of increased rate were only temporarily available, and then the market softened relatively quickly through last summer, and in particular into the last P&I reinsurance renewal season.”

Into 2025/26, capacity has remained stable. “There have been no withdrawals of P&I reinsurance capacity in the market. We’re seeing probably fewer than a handful of new entrants coming to the market looking to write P&I reinsurance in 2026 and we’re aware of several existing reinsurance markets which are looking to increase their line size and market share into 2026 as well,” Cudlipp said. 

“Certainly the macro environment is leaning slightly more towards the buyers than it was a year ago.”

Relationships and data stand out as the two biggest points of differentiation. With long-tail liabilities and slow claims development, reinsurers value consistency and predictability. “It’s becoming more important that the long-term relationship is going to be beneficial to both sides,” Cudlipp stressed. 

Alongside this, buyers who can provide accurate and granular data “achieve better reinsurance outcomes than those who cannot”.

Claims trends remain the most significant source of pressure. Cudlipp noted that it was “all geared around historic and expected future claims levels, and that’s where the data aspect becomes very important”. 

He added: “We’ve experienced major claims in the market over the last 10 to 20 years where it’s taken several years to come to the ultimate value of that claim. Modern insurers can sometimes struggle to understand that they may have to wait a longer period of time than their shorter tail lines of business to get certainty of outcome.”

Systemic risks such as cyber or environmental liabilities have not materialised significantly in P&I, although they loom elsewhere in marine. “They look systemic from an outsider’s perspective, but from an industry lens, there’s a little more understanding of what happens in reality aboard ships on a day-to-day basis,” he explained.

Other concerns

Geopolitical pressures remain real. Cudlipp pointed to the quick response by clubs, brokers and reinsurers to maintain cover for Ukraine’s humanitarian grain corridor, and the rise of cancellation clauses. “The market now has the ability to send notice of cancellation on particular war areas in P&I reinsurance, which is something new over the last three years,” he said. 

Still, he insisted, “clients and markets, if required, will always find a solution. There is capacity out there to keep global trade moving”. 

The concentration of risk among the 12 international group clubs also shapes reinsurance strategies. While P&I is often commoditised, reinsurers scrutinise the mix of business, particularly exposures from large container ships. That lens extends to vessel size, trade routes and accumulation risk.

“Some reinsurers do choose to write certain clubs, or to write clubs at a maybe more remote level, where their historic claims activity hasn’t yet occurred,” Cudlipp observed.

Gallagher Re has developed tools to dig deeper into claims and portfolio analysis. “We now have tools which allow us to be more forensic in the analysis of portfolios for risk type through to claim type, through to some predictive analytical tools we’ve developed here,” he said.

Overall, Cudlipp expects an orderly renewal, barring shocks. “We’re sitting steady for a relatively calm and sensible renewal season,” he concluded.

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