Shipowners Club bucks P&I renewal rate hike trend

Protection and indemnity (P&I) insurer the Shipowners Club said it will not increase rates for 2025 at renewal in February, bucking the trend among its peer groups for a general increase. While it warned shipowners that some portfolios would be subject to “further review”, the mutual club said it is on track to close the 2024/5 year in profit.

The Shipowners Club singled out the yacht sector as a potential area that could see changes to its underwriting approach. It said the costs of claims in the yacht line have continued to increase, driven by fires and a small number of claims in the US. The yacht market also finds it hard to secure good-quality crew, the club said.

But it expects to see steady growth in the number of member vessels and gross tonnage in 2025. The P&I club will continue to target a breakeven combined ratio in the 2025/6 financial year despite headwinds from inflation and higher reinsurance costs, particularly to the International Group of P&I Clubs.

At the mid-year point, Shipowners Club said claims are at a slightly lower level compared with the same time last year, although losses at the International Group are up. Shipowners’ premiums have outpaced claims costs to report a combined ratio 95.8%. Claims releases on previous years and favourable income development have also helped to drive down the combined ratio.

But the group said both its own claims and claims to the International Group have increased since June, although not enough to raise the combined ratio above 100% by year-end.

“Given the margin between premium income and claims costs, the board resolved that no general increase would be applied for 2025, consistent with the Club’s long-standing philosophy that increases in premium would only be requested when absolutely required,” it said. The mutual added that there would be no blanket increase in deductibles, and renewal premiums would include any adjustment to reinsurance costs.

However, its approach is in contrast to other marine mutuals. The American Steamship Owners Mutual Protection and Indemnity Association told members recently that it would target a 7% general increase on renewals for 2025/6, citing inflationary impacts and rising claims to the International Group pool. It also said the current year has recorded higher-than-expected claims to date.

The Swedish Club said it will apply a 5% general increase for 2025/6 renewals to cover rising claims costs, with large claims returning to more expected levels after two benign years.

The London Steamship Owners Mutual Association is also calling for a 5% increase in average rates, although not a general increase, again concerned by the severity of claims and inflationary pressures. Britannia Group said it would adjust rates based on individual risk profile but warned that it is targeting a minimum increase of 7.5% on renewals for 2025/6 as it continues to address its underwriting deficit.

Earlier this month, NorthStandard announced a 5% general increase on renewal rates for 2025/6, driven by both the number and size of claims this year, as well as supply chain volatility. It has forecast a net combined ratio of more than 110% for full-year 2024/5.

S&P Global Ratings expects rates imposed by members of the International Group on renewal to increase by an average 5%, similar to the increase last year, while the sector is expected to post an average combined ratio of 100% to 105% for full-year.