In response to a high level of pool claims and volatile investment markets, protection and indemnity (P&I) clubs are seeking price improvements at the February 2021 renewal.
A new Best's Market Segment Report, "P&I Clubs in 2021 — Navigating Their Way in a Hardening Market", notes that an increase in the cost of claims and competitive pressures have contributed to a series of poor underwriting results for the sector, prompting the majority of P&I clubs to announce general increases for the second consecutive year.
AM Best considers the level of the general increases imposed by the clubs this year to be modest, reflecting the need for clubs to balance their own financial stability with the economic constraints of their membership.
Jose Berenguer, financial analyst, says: “Due to the COVID-19 pandemic, commercial conditions for ship-owners are even more challenging than in previous years, and with the current high level of free reserves across the International Group, a higher level of general premium increases may be difficult for clubs to justify to their members.”
The report explains that the general increases announced by the majority of the clubs for the February 2021 renewal should help improve underwriting results, but predicts that further general increases will be required before the clubs return to overall technical profit.
Mathilde Jakobsen, director, adds: “There continues to be a buffer in current levels of capitalisation to absorb performance pressures. However, with interest rates at historic lows and equity markets volatile, clubs need to keep their focus on underwriting discipline to ensure financial strength is maintained.”
To access a complimentary copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=305993.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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