Insurance broker Tysers has told protection and indemnity insurers they should write off 2020 as an exceptional year when they consider premium hikes at the next round of policy renewals in February.
Although recent results have indicated that P&I clubs need to raise rates to address technical underwriting losses and some large claims, Tysers suggested they should “hold fire” given the struggles of their shipowner members during the coronavirus pandemic.
Tysers said: “We feel there is a strong argument the [International Group of P&I Clubs] should be prepared to write off 2020 as an exceptional year, accepting that members have suffered badly in both a business and personal sense, and offer a neutral renewal by deferring any perceived need for corrective action.”
In its latest annual review of P&I clubs, the insurance broker further pointed out that next year’s renewal negotiations are likely to take place with travel and social distancing rules still in place.
That is likely to make next February’s renewal negotiations particularly difficult to carry out, which Tysers suggested is another reason for P&I clubs to be cautious over rate increases.
“If current travel and meeting restrictions continue, P&I renewals will have to be handled in a very different way to that which underwriters and shipowners are accustomed, and we can envisage both clubs and members suffering considerable frustration with the handling and outcome of negotiations,” Tysers said.
The P&I clubs are still in a strong financial position to hold off increases for another year, the broker suggested.
Tysers said that last year the 13 members of the International Group managed to increase their free reserves collectively by $200m despite the underwriting losses.
“The International Group is financially strong, with most clubs exceeding solvency margin requirements, while many shipowners are struggling to cope with the impact of Covid 19. The clubs, owned by the members, should hold fire until the full consequences of the pandemic become clear,” the broker said.
