Principles over profit: Why specialist P&I provider turned down $50m in business

The Shipowners’ Club turned down $50m of potential new business in 2023 over risk concerns.

The declined business would have represented a significant proportion of revenues at the protection and indemnity club, which on Thursday reported improved premium income of $248.9m for the year.

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CEO Simon Peacock told TradeWinds the declined business represented an uptick from previous years and was linked to concerns over pricing and risk management of ships.

He said the issue had nothing to do with sanctions despite increased enforcement of Russia and Iran-related measures that have forced some owners to seek alternative insurance coverage.

“The tonnage that’s being shown does not necessarily meet the risk standard,” said Peacock, who took over the top job at the club last year.

“It’s something we track year on year and is higher than previous years, although not necessarily significantly higher.

“It’s not driven by the sanctions environment. I think we’ve been shown more business this year than we would have been shown in previous years and, consequently, the value of the declined business has grown.”

The issue was flagged in the club’s annual report alongside results that included an underwriting surplus despite a major claim following a tanker casualty in the Philippines that increased total claims by 30%.

Membership integrity

Chairman Donald MacLeod said it was not in the club’s best interests to secure new business that did not conform with the rest of the membership.

“The club will never sacrifice its underwriting principles for the sake of garnering increased revenues,” he wrote.

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The Shipowners’ Club is one of the smallest of the International Group of P&I Clubs’ 12 members, based on gross tonnage.

But its focus on small and specialist ships means it has 35,074 vessels, the most of any International Group members.

That was up from 33,808 the previous year. Tonnage and membership were also up.

Peacock said the club’s prudent approach to new business had contributed to a five-year average combined ratio of 100%, reflecting a sound balance between claims and premiums.