The Feb. 20 protection and indemnity renewal looks set to be one of the toughest in recent years for shipowners.

The 13 members of the International Group of P&I Clubs, the largest P&I clubs in the world, are asking their members for an average general increase of 7.5% at the annual Feb. 20 renewal, according to research by Standard & Poor's Corp.

The highest general increase asked for by a member of the international group is 15% to 16%, while the lowest is 5%, S&P noted in a report released last week.

S&P — which views the P&I sector as stable and upgraded six P&I clubs last year — “would be concerned” if many clubs did not achieve the rate increases they are seeking at the 2013 renewal, said Ali Karakuyu, a credit analyst at S&P in London.

Challenging operating conditions for ship operators, a 13% increase in incurred claims, a 5.9% underwriting loss for the P&I market in the 2011-2012 year and the largest claim ever for the reinsurers of the International Group — the loss of the cruise ship Costa Concordia in January 2012 (see story, page 30) — are among the factors that set the stage for “some of the hardest-fought negotiations since the turn of the century,” said Ben Abraham, global P&I practice leader for Willis Group Holdings P.L.C. in London.

Claims inflation has been a major factor behind rising rates, experts say. And the increased individual size and less predictable frequency of individual claims have caused huge volatility, according to Willis' Mr. Abraham.

“Over the past 10 years, each and every claim has been getting more expensive,” said Rolf Thore Roppestad, senior vice president and co-head of underwriting at Gard P&I (Bermuda) Ltd., which is asking members for a 5% increased advance call.

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For example, he said, 10 years ago the average claim for Gard was about $25,000, while last year the average claim size reached $70,000.

Claims costs have increased because of various factors, he said, including the cost of wreck removal and pollution cleanup. There also are underlying causes such as increases in cargo values and crew wages, he said.

Mr. Roppestad said that, for the previous two renewals, Gard was able to offer rate reductions to its members. But this year “there was no way round” rate increases, he said.

The most significant recent claims have been seen in the passenger and dry cargo sectors, and that is where rate increases are being seen, said Nick Taylor, head of P&I in Marsh Inc.'s marine practice in London.

For example, he said, the grounding of the container ship Rena off the coast of New Zealand in October 2011 typifies the problems for the dry cargo sector. The Rena was a fairly small container, he said, but cleanup costs will be in excess of $300 million, with the brunt of that cost borne by the reinsurance sector, largely within Lloyd's of London.

The cost of pooled losses that are shared among P&I clubs and the cost of reinsurance have increased, and this eats into the amount that clubs can retain to pay attritional claims, said Marsh's Mr. Taylor.

Clubs that have taken on a large amount of newer tonnage have fewer years of retained premiums built up than those with a large number of older ships and, therefore, are less able to be flexible on rates, he noted.

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There are 17 pool claims, according to S&P, and the high number and cost of these claims has caused some clubs to fall into deficit even when their own loss experience would not have dented profits, it said.

Some shipowners, faced with large calls from their clubs and increased reinsurance costs, may seek to change clubs, experts said.

While there typically is about a 98% retention rate for owners remaining with P&I Clubs, the large rate increases being sought by some clubs may test shipowners' loyalty, said Peter McClean, a director of financial institutions ratings at S&P in London, and there may be more movement of shipowners between clubs than usual.

There likely will be an “above-average movement of tonnage” at the Feb. 20 renewal, likely as shipowners attempt to improve their positions for the 2013-2014 year, said Mr. Taylor.

Some shipowners may consolidate their membership from several clubs into just one, he said.