Protection and indemnity brokers at Aon are warning that further increases in premiums at the upcoming policy renewal will only add to the financial pain felt by shipowners in the pandemic hit shipping markets.
It is anticipating that P&I clubs are targeting another round of rate rises at next February’s renewal that it believes might not be necessary given the strong finances of most clubs.
It said there is “every indication that premiums will increase” at the next renewal.
“At a time when shipping like most of the global economy is suffering this will only add more misery. Are these actions justifiable, for some yes, but for others it is doubtful. Free reserves across the group are stable and currently buoyed by better returns from the investment market,” Aon commented.
Aon said the P&I clubs should take a much more detailed view of each member's claims performance, and their own financial situation, to decide rates rather than applying an general increase across the board to all members.
Reduced premiums
It said most owners would prefer to see any surplus in P&I club finances returned to members in the form of reduced premiums rather than a return of capital at the end of each policy year.
Clubs are going through difficult times too. The widespread lay up of cruise vessels has made a significant dent in premium income for clubs operating in that sector Aon said.
The International Group of P&I clubs is also heading for its highest level of pools claims in more than 10 years Aon estimates. The effect of that is likely to increase the International Group’s reinsurance rates at the next reinsurance policy renewal in 2022.
Higher International Group reinsurance rates will be reflected in the premium each shipowner member pays to its P&I club.
