The UK P&I Club has told its shipowner members to expect a 10% general increase at the next policy renewal in February.
In a note to members, the protection and indemnity insurer said the increase is required to correct an “underwriting deficit”.
The mutual added that members with poor claims records should expect even higher premium increases.
The UK Club said: “Premium is no longer sufficient to cover the cost of claims and expenses after rate declines across the market over several years.”
The insurer added that its finances remain strong, with free reserves of more than $500m.
The UK Club said a large part of the increase is due to the unusually large number of pooled claims that are shared between the 13 members of the International Group of P&I Clubs.
Brokers estimate that International Group pool claims have already exceeded $400m, including individual club retention, with four months of the policy year remaining.
The UK Club said it believes the International Group claims could turn out to be one of the highest ever recorded.
“The UK Club’s contribution to claims arising through the pool in the first half of the 2020 policy year was approximately three times greater than over the comparable period in recent years,” the mutual said.
One of many
The UK Club is not alone in increasing premiums at the renewal, with all of the International Group members seemingly set for underwriting losses this year.
Steamship Mutual, the Standard Club, Gard, Britannia and the West of England have all said they are targeting higher premium levels — and others are expected to follow.
Norway’s Skuld also confirmed that it will be seeking higher premium income after its November board meeting.
Skuld did not specify a general increase but said it would prefer to determine premium levels through individual negotiation with members.
Considerable deficit
Skuld said its mutual combined ratio stands at 147%, indicating that its P&I business is running at a considerable deficit.
The outfit said it would correct the shortfall through adjustments to premium income.
“In order to protect Skuld’s financial position and to ensure the sustainability of the mutual portfolio, the board has directed management to adequately address the challenging mutual underwriting performance during the upcoming renewal negotiations by securing the necessary individually-assessed premium increases from all mutual members,” Skuld said.
