P&I clubs bounce back but challenges remain say Willis
Its P&I Market Review 2010/11 reported that investment income in the P&I insurance market, which provides shipowners with marine legal liability coverage, bounced back to $680m in 2009/10 after record losses cost the market $840m in 2008/09.
Across the P&I market as a whole, Willis said that underwriters almost broke even, with an overall underwriting deficit of only 1% for the 2009/10 financial year.
This result was achieved against the highest levels of claims in the market’s history with a 12.5% increase in total incurred claims on 2008/09.
Ben Abraham, who leads the Willis P&I division, said, “After one of the worst years on record, the P&I market made a spectacular comeback in 2009/10 with total assets and free reserves representing all time record highs for the International Group. In contrast to this positive news, claims are similarly at an all-time high, worryingly not due to a surge in very large claims, but to the increasing cost of more routine claims.”
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The Willis report noted that the variance in performance between individual clubs continues to be marked though with the largest individual club having an underwriting surplus of 7% in contrast to the worst deficit which was reported at 23%.
“While two thirds of clubs in the market are performing close to balance, a minority of clubs still have some way to go to break even. Imminent widespread unbudgeted calls are unlikely, but the underperforming clubs are inevitably more vulnerable to fluctuations in claims or investment performance,” explained Mr Abraham.
The Willis P&I Market Review 2010/11 analyses the overall results of the International Group, an association that arranges the collective insurance and reinsurance for 13 P&I clubs—insurance mutuals that in turn provide liability cover for their shipowner and charterer members.
