Insurance broking giant Aon has called for the International Group of P&I Clubs to be more transparent on the details of its pool claims.

Under the pooling system, the International Group’s 13 protection and indemnity club members share the cost of claims above $10m.

P&I clubs have used two years of successive high pool claims as justification for substantial increases in premium.

The International Group’s reinsurers are also threatening to raise rates significantly at next year’s renewal because of the high level of claims. A higher International Group reinsurance bill would be passed on to P&I clubs’ shipowner members.

In its post-renewal report, Aon said owners deserve to know the details of these claims. Aon said it is a “huge supporter” of the International Group pool system but believes it needs reform.

“Despite the clubs using pool claims as justification for their increases, they are very reluctant to release any details about these claims,” it said.

“The secrecy around the pool has certainly increased in the last year, which is disappointing and may lead some to question whether the clubs are being purposely opaque in order to give their members less opportunity to scrutinise and question the justification behind the increases they are being asked to pay.”

The International Group publishes figures on pool claims in its annual report but rarely names individual claims or claims reserve figures.

Chief executive Nick Shaw said the P&I mutuals are owned and controlled by their members and operate in their best interest in pool claims reporting.

Transparency is an issue, as the eventual claims payout is sometimes less than the amount put into reserve to cover the cost by the P&I clubs.

That leaves clubs with surplus cash if the claims do not turn out to be as costly as feared, and takes away the justification for having asked for premium rises in the first place.

Difficult renewal

Aon's P&I team is made up of (from left) director Chris Chadwick, executive director David Mahoney and director Chris Gimson. Photo: Adam Corbett

Aon estimates that the International Group pool bill for 2020 will be $450m, compared with a more average year of around $250m.

Individual claims over $100m are covered by its reinsurance scheme.

However, a large portion of the International Group’s reinsurance deal is coming up for renewal next year.

At the renewal, reinsurance underwriters will take into consideration a claims bill approaching $800m to remove the 7,700-ceu Golden Ray (built 2017) wreck from the US port of Brunswick, Georgia.

“It is likely that the 2021 renewal of the International Group reinsurance contract will be difficult,” Aon said.

“The contract was on a two-year deal, so no increase has been paid since the Golden Ray claim, and we suspect that reinsurers will want to see increases to reflect the hardening market and significant losses they have suffered as a result of Golden Ray.”

The other concern is whether the grounding of the 20,388-teu Ever Given (built 2018) in the Suez Canal last month will eat into the International Group’s reinsurance.