Protection and Indemnity clubs have sought further price improvements at renewals this week, to keep up with claims inflation, according to a Best’s Market Segment Report.

The report highlights the AM Best expectation that underwriting performance will remain similar to the previous year, returning an overall combined ratio close to 100 per cent.

Best considers the level of general increases necessary for clubs to maintain the break-even underwriting results seen in the 2022-23 year, even after a benign year in pool claims. It was the first year of combined underwriting profits for the 12 clubs since 2016-17.

Clubs are generally expected to report significant investment returns in the 2023-24 year, leading to a partial recovery of free reserves.

The report notes that for the fifth consecutive year, the majority of P&I clubs announced general increases ahead of Tuesday’s renewal date for shipowners, with the purpose of maintaining price adequacy and keeping up with claims inflation.

It notes the general increases announced by P&I Clubs for 2024 are slightly below those of the previous year, which in some cases were up to ten per cent.

Seven clubs had announced they would apply a 7.5 per cent increase to P&I premium rates, while five have applied a five per cent increase.

The report said: “AM Best considers the level of general increases necessary for clubs to maintain the break-even underwriting results seen in 2022-23 and expected for 2023-24, in the face of inflationary economic conditions and the potential for a worse pool year to emerge in the future.

“As most of the clubs have reached price adequacy and financial results are also improving, there should be less need for substantial rate adjustments in subsequent renewals. However, some level of increase may continue to offset the impact of inflation on claims and expenses.”

The International Group of P&I Clubs are the 12 clubs that collectively insure about 90 per cent of the world’s ocean-going tonnage.

They reported an underwriting surplus of $152 million for the 2022-23 financial year, based on the combined accounts of the principal clubs.

The prior year registered a $267 million loss and the combined ratio also showed a substantial improvement to 95 per cent from 107 per cent, according to AM Best. Five of the clubs reported mostly moderate losses

• For the Best’s Market Segment Report on P&I Clubs, see Related Media

Download PDF File

BEST’s Market P&I Clubs.pdf