The International Group of P&I Clubs has cut the cost of its reinsurance scheme across the board after a recent reduction in claims.
The International Group’s 12 member clubs reinsure its pooled claims scheme through a programme led by AXA XL covering claims over $100m.
At next year’s renewal, reinsurers are now lowering the cost of the scheme to reflect two successive years of below-average claims.
Reinsurers’ non-marine losses have also been low, which has given them more scope to reduce rates.
Passenger ships will benefit the most with a 12.5% cut in reinsurance costs, followed by persistent oil tankers with a 7.5% reduction.
But for container ships, which have had a troubled claims history of late, the reduction is limited to just 1%.
“I am delighted to announce a positive renewal for shipowners for February 2024, with all vessel types seeing rate reductions,” said Mike Hall, who heads the International Group’s reinsurance committee.
“The International Group has managed its claims profile extremely efficiently over the last few years and the efforts of clubs and shipowners in their loss prevention programmes have helped to contribute to a more benign claims environment, despite two major conflicts and other geopolitical challenges.”
International Group members pool claims in excess of $10m. The costs of the reinsurance scheme are passed directly onto each club’s shipowner members.
The reduction in reinsurance costs will, to some extent, help offset increases in protection and indemnity premiums, which the clubs are planning to put in place at next February’s renewal.
The 12 clubs have announced general increases of between 5% and 7.5%.
The Ukraine, Russia and Belarus exclusion clause, which was introduced for war risks in the reinsurance programme, remains in place.
The International Group has purchased aggregated sub-limited cover of $80m from the reinsurance markets to cover the excluded risks.
The renewal also appears to signify that the reinsurance market has recovered its costs from shipping’s most expensive casualty, the grounding of the Costa Concordia in 2012.
Passenger ships have faced continued increases in reinsurance costs since the incident, despite having a clean claims record with the International Group’s reinsurers for more than a decade.