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FOR IMMEDIATE RELEASE
LONDON - FEBRUARY 19, 2020 07:45 AM (EST)
Amid strong competition and challenging commercial conditions, pricing remains under pressure ahead of the February 20, 2020 deadline for ship-owners’ marine protection and indemnity (P&I) renewal. However, following three years when no increases were the norm, a large majority of P&I clubs have announced general increases for the 2020 renewal. This change in approach comes after most of them reported poor results for the year ending February 2019.
AM Best notes in its new Best’s Market Segment Report, “Premium Increases as P&I Clubs React to Deteriorating Results”, that the level of general increases of between 2.5% and 7.5% is fairly modest given the underwriting loss reported in 2018/19. However, Jose Berenguer, associate financial analyst, adds: “Over the past few years, renewals have become increasingly informed by analysis of individual loss records and risk exposures, with deductibles used to control exposures. AM Best notes that member-specific pricing adjustments are also carried out by clubs applying general increases.”
The report notes that the accumulation of free reserves in recent years has strengthened clubs’ overall risk-adjusted capitalisation, but has also led to pressure to reduce prices. This, combined with a challenging claims environment, has eroded underwriting profitability, leading to the overall technical loss reported in 2018/19 and expected for 2019/20. Mathilde Jakobsen, director, adds: “The general increases announced by the majority of the clubs for the February 2020 renewal should help improve underwriting results, but AM Best expects that further general increases will be required in a year’s time before the clubs return to overall technical profit.”
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=294461 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.