Ship owners to see reduced P&I premiums in 2016: Willis

The association of P&I clubs made its first overall underwriting surplus since 2010

Ship owners with good records will see reduced premiums for protection and indemnity insurance at the 2016 renewals, Willis predicts.

This liability coverage for ship operators is primarily provided by P&I Clubs, which are trying to increase premiums by two percent.

But “it is almost certain however that market forces will prevail and lower actual renewal results will be widely achieved,” Willis said in its P&I Review 2015/16 report. “In the continuing challenging shipping market, we expect ship owning members to be pressing for the lowest renewal proposals in the 2016 renewals.”

Having seen a four percent increase in total market premiums and three percent reduction in net incurred claims, P&I clubs are doing very well. The International Group, an association of P&I clubs, made its first overall underwriting surplus since 2010.

“Nevertheless, the industry faces challenges: investment market returns have reduced compared to the previous year, and claims remain volatile,” Ben Abraham, head of Willis’ marine division, said in a release. :The 2016 renewals will likely prove contentious as general increases come under pressure from ship operators looking to reduce costs in challenging freight markets whilst a number of underwriters sit on healthy underwriting surpluses.”

Release calls–the charge paid by ship owners who want to be released from a P&I club–made up, on average, 10 percent of a club’s total annual premium in 2012 and 6.8 percent today.

“Over the past decade Willis has advocated for a decrease, questioning whether some clubs view release calls more as a commercial penalty rather than calculating a reasonable estimate of future exposure,” Abraham said. “We are now seeing some traction in this space as average release call levels have come down to a reasonable level, though there is still some room for improvement, within certain clubs.”

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.