Protection and indemnity insurers described this year’s renewal negotiation as “difficult” even though in the end there was no major fleet changes after contracts were renewed on 20 February.
After all but one of the 13 members that make up the International Group of Protection & Indemnity Clubs decided against a general increase, underwriters were determined to secure higher premiums from shipowners with poor claims records to protect premium income.
On the other side of the negotiating table were owners keen to secure some discount ahead of rate increases expected next year.
Tough negotiations
“The negotiations were difficult but in terms of movement it was all rather boring,” said one club underwriter.
The most hotly contested negotiations were for the business of leading South Korean shipowner SK Shipping’s after existing P&I providers Britannia P&I, Standard Club and Steamship Mutual declared it “new business”, and open for free competition between the clubs.
The clubs decided the acquisition of SK Shipping by Hahn & Co last year was enough to define the company’s ownership as “new” and, as such, clubs could compete for it outside the terms of the International Group Agreement.
SK Shipping is regarded as prime business with a fleet of 70 modern tankers including LNG and LPG carriers.
We have been through a strategic evaluation of our combined portfolios and we have concluded on what we believe to be the strongest and most effective structure for 'Hafnia a member of BW Group' going forward Ralph Juhl
Insurance brokers suggested that SK Shipping has managed to agree significantly better terms largely from its existing clubs.
However, Britannia and the Standard Club have lost some ships, while Steamship Mutual has seen a net gain from SK Shipping. Skuld has also won some ships from SK Shipping, while the North P&I Club came out best after scooping SK Shipping’s chartered fleet business.
Scandinavian clubs
Overall, it was a good renewal season for the Scandinavian mutuals with Skuld, the Swedish Club and Gard all understood to have registered gains. Skuld was reported to have won the business of dry bulk owner Guardian Navigation, which controls nine supramax bulkers. Skuld chief executive Stale Hansen declined to comment.
The acquisition of the Hafnia product tanker fleet by BW Group was also was expected to result in some movement around the clubs but after negotiating the renewal Hafnia said it would stick with its existing providers Skuld and Britannia.
Hafnia executive vice president technical Ralph Juhl told TradeWinds: “We have been through a strategic evaluation of our combined portfolios and we have concluded on what we believe to be the strongest and most effective structure for 'Hafnia a member of BW Group' going forward.”
“Both Hafnia and BW have historically strong relations to their partners in the P&I business and, therefore, we have made a structure where we continue with the partners that has been around the two companies previously and whom we have been working successfully with a long time.”
NYK Line’s change of broking arrangements from Aon to JLT came too late for this year’s renewal.
Strategic review
However, NYK, one of the largest P&I accounts in the world, is expected to undertake a strategic review of its P&I providers with JLT this year with a view to renewing its arrangements in the next renewal.
One source said: “Aon did a great job getting a better price for NYK. Now it's all about reviewing the services and value for money it is getting from the clubs with JLT.”
