London P&I Club sees claims costs double in five years

The London P&I Club has admitted that increased claims on the international group pool and deterioration in the costs of the already expensive prior years of 2018/19 and 2019/20 have weighed on its results for the 2020/21 financial year.

The London P&I Club said the challenging claims environment, and the impact of the COVID-19 pandemic, had created a difficult backdrop in the last 12 months. Claims costs in 2021 were double what they were five years ago, it added.

The Club reported a combined ratio of 136.8 percent and an overall operating deficit of $20.3 million for 2020/21. The year-end free reserve was $153.6 million.

Ian Gooch, chief executive of A Bilbrough & Co, which manages the Club, said: “Our products for charterers and owners of smaller ships recorded positive underwriting results and we saw a 5.3 percent return on the Club’s invested assets.”

The mutual P&I business, however, experienced a number of challenges, he said, particularly around claims, which were driven up in part by the pandemic.

“In short, claims costs have increased in five consecutive years to the point that in 2020/21 they were at twice the level we saw five years ago,” said Gooch. “This came at a time when rating in the sector was already approaching unsustainable levels.”

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