Shipping’s leading protection and indemnity insurers declared themselves satisfied with the results of this year’s 20 February policy renewal in which they attempted to achieve the biggest hike in premiums in more than a decade.
A hard line on increasing rates by the P&I insurers has led to a significant amount of movement between clubs.
In one of the biggest changes, it has emerged that the North P&I Club has lost a major account after parting company with prestige member Teekay.
North P&I is not commenting on the move, but brokers say the club has been one of the most determined to apply its 15% general increase in rates fairly across its membership.
Teekay has now consolidated its owned and bareboat chartered fleet with Gard and the Standard Club in movements brokered through Marsh.
North P&I described its renewal as “successful”. Chief executive Paul Jennings said: “We have secured the necessary premium growth across both our mutual and diversified lines of business, with total annual premium expected to exceed $450m in the next year.”
Chief underwriting officer Thya Kathiravel said the decision to apply the 15% increase “was the correct response to the prevailing conditions and aligns with our principles of promoting fair and equitable mutuality”.
Gard — by far the largest and most financially successful P&I club — has been able to leverage its strong market position to add tonnage. It applied a relatively low 7% general increase and its competitive position attracted tonnage from other clubs.
The Arendal-based mutual said it had added 11m gt during the renewal and increased its entered fleet by 14m gt throughout the year.
Commenting on this year’s renewal, Gard chief executive Rolf Roppestad said: “We saw more business coming in from Greece, Asia and other regions, as well as continued consolidation with owners shifting their fleets to benefit from the strength and stability that we offer.
“We are happy to see that the consistency we deliver is valued both by existing and new members.”
As earlier reported by TradeWinds, the West of England P&I Club parted ways with long-standing member Mediterranean Shipping Co (MSC).
West of England chief executive Tom Bowsher said its membership had endorsed its strategy to derisk the business by not offering renewal terms to members with adverse claims records.
“We recognise that this had been a difficult renewal for all and in a limited number of cases we sadly chose to relinquish what have often been long-term relationships with a number of shipowners,” he said.
“However, we are pleased to see that our members share our view of the market, and have endorsed our strategy through their decision to continue to partner with the West, with the retention rate of those members offered renewal terms at 98%.”
Consolidation of factors
Gary Field, chief underwriting officer at Steamship Mutual, said the renewal confirmed that the market is now firmly in a hard phase. He said this year’s renewal had been a culmination of a number of ongoing issues in the world of P&I.
“There has been a consolidation of so many factors affecting this renewal; the obvious and inherent need for rate rises which has been discussed for some time now, the increases in excess of loss cover required by the market on the back of coming out of a two-year deal, and ongoing pool volatility through this year which, to us, represents a paradigm shift in how we need to consider the volatility of large claims going forward,” he said.
He added that the negative outlook by rating agencies and lack of investment income also added to the pressure on P&I clubs.
“We are happy with our renewal and we’ve achieved exactly what we set out to do, which was to achieve the rates rises which we and our board feel we need to return to an underwriting break-even,” Field said.
Brokers also appear to have benefited from the renewal. Pressure from P&I clubs to increase rates has led many shipping companies to turn to brokers to help them strike a better deal.
Industry sources told TradeWinds that Gallagher has won the account of Qatar Gas Transportation company Nakilat. The broker declined to comment on talk of the appointment.
