COMING Protection and Indemnity (P&I) renewals are poised to be the most troubled in 10 years because of hard times for ship operators
Insurers expect 2013 to be contentious year of P&I negotiations COMING Protection and Indemnity (P&I) renewals are poised to be the most troubled in 10 years because of hard times for ship operators, poor underwriting results and some of the largest claims in history, according the Willis Global Marine annual P&I Market Review.
"The 2013 renewal will likely present some of the hardest fought negotiations since the turn of the century," said the report's author Ben Abraham, global P&I practice leader.
He said the P&I market results last year (2011/12) showed a 13 per cent increase in incurred claims, a 5.9 per cent underwriting loss and only a 2.7 per cent investment return.
Total market free reserves increased marginally (four per cent) but tonnage increased by nine per cent over the same period. The market is therefore larger, but proportionately slightly weaker than the previous reporting period.
"Against this backdrop, 2011/12 has the dubious honour of registering the highest level of net paid and net incurred claims ever reported by the P&I market (two per cent and eight per cent higher than the previous record level in 2009/10)," said the report.
"Added to that, 10 out of the 13 P&I clubs reported underwriting losses. On a financial year basis in 2011/12, the largest individual P&I club combined ratio was 120 per cent, the lowest was 85 per cent. Neither of these extremes of underwriting deficit or surplus (respectively) should be sustainable in a mutual environment.
