All shipowners are set to benefit for the first time in many years from a reduction in the reinsurance tariff levied by the International Group protection and indemnity clubs.
Rates for both crude and products tankers fall by 10.25% and for bulk carriers, containerships and other dry cargo vessels by 7.18%.
There is also a reduction for cruiseships or passenger ferries of 7.19% reflecting the passage of time since the huge Costa Concordia claim.
Reinsurance rates for charterers are also cut by more than 5%.
The expectation that reinsurance costs would fall has been flagged since late last year but the reductions are slightly more than many expected reflecting continued softness in reinsurance markets.
P&I Club retentions move from $9m to $10m per claim from the 20 February renewal but the biggest change is that there is a new participant taking 5% of a $1bn of risk excess of $100m.
The 36 month deal with Hannover Re means there are now three private placements in the reinsurance contract each taking the same risk. A deal with Berkshire Hathaway was agreed two year ago and with Liberty Mutual a year ago.
“Use of a third multi year fixed placement, has enabled the group to achieve advantageous reinsurance renewal terms,” said Paul Jennings, the North of England Club managing director who chairs the International Group reinsurance sub-committee.
How the P&I reinsurance tariff is reducing from the renewal
| 2016 $ per gt | 2015 $ per gt | Reduction | |
| Dirty tankers | 0.6567 | 0.7317 | 10.25% |
| Clean tankers | 0.2816 | 0.3138 | 10.26% |
| Dry cargo vessels | 0.4537 | 0.4888 | 7.18% |
| Passenger vessels | 3.5073 | 3.7791 | 7.19% |
| Chartered tankers | 0.2380 | 0.2522 | 5.63% |
| Chartered dry cargo | 0.1163 | 0.1228 | 5.29% |
The renewal has been negotiated by Miller Insurance Services with underwriters led by the XL Catlin group.
The P&I clubs pass the cost of their $3bn excess of loss reinsurance contract directly on to shipowners through a tariff based on gross tonnage and ship type as shown in the table.
The reinsurance tariff accounts for a major slice of total P&I costs for owners of large tankers and passengerships.
There has been ongoing pressure for the P&I clubs to differentiate between bulk carriers and containerships and cruiseships and ferries but the tariff retains the existing four ship categories for the year from 20 February 2016.
