Broker Gallagher has suggested that protection and indemnity insurers could use their plentiful financial reserves to cushion the blow of an increase in reinsurance costs expected next year.
The International Group of P&I Clubs is currently negotiating its reinsurance contract for pooled claims costs in excess of $100m.
A spate of costly claims means that there is likely to be a sharp rise in reinsurance costs that Gallagher says the market is estimating in the region of 30%.
The reinsurance increase will be directly passed down to shipowners at next February's renewal.
That comes on top of 10% to 15% increases in basic P&I premiums, which are already being lined up.
Gallagher said the market talk is of a "perfect storm" brewing that is set to hit shipowners.
Executive director Malcolm Godfrey questioned whether the collective $5.5bn in free reserves held by P&I clubs could be used to soften the financial blow.
Opportune moment
"Should clubs act as a mutual and control the reinsurance renewal costs of their members, whilst help alleviate the impeding rate increase pressures through an allocation of investment returns or contingent part of their free reserves?" asked Godfrey in the broker's latest report.
"Would this not be an opportune moment and use the group’s overall financial resilience to mitigate the impact of the coming process?" he questioned.
However, Godfrey said that managers at P&I clubs have told him they would be reluctant to take such action. They had not increased free reserves when reinsurance costs fell, they said, so why should they cover the cost when rates increase.
