Shipowners insurance rates could rise about 2% in 2016

Protection and indemnity clubs want to achieve an average of 2% increases in premium, but shipowners with good records can look forward to reductions in premiums for P&I insurance at the 2016 renewals, according to a report released by Willis Group Holdings P.L.C. Tuesday.

According to Willis’ Protection & Indemnity 2015/16 Market Review, the International Group of P&I clubs market has announced an average general increase of 2%, with some clubs going over and under. But Willis said “it is almost certain, however, that market forces will prevail, and lower actual renewal results will be widely achieved. In the continuing challenging shipping market, we expect ship owning members to be pressing for the lowest renewal proposals in the 2016 renewals.”

The report said that the International Group is at the most financially healthy state in its history. “Claims remain volatile and investment markets fragile, but a relative slowdown in number of major claims has allowed the IG market to make its first overall underwriting surplus since 2010,” said the report.

“We are seeing the P&I market picking up with the first surplus since 2010/11 and nine out of 13 clubs reporting an increase in underwriting results,” Ben Abraham, head of Willis’ marine division in London, said in a statement accompanying the report. “Nevertheless, the industry faces challenges: Investment market returns have reduced compared to the previous year (down 2.9% from 3.7%), and claims remain volatile. The 2016 renewals will likely prove contentious as general increases come under pressure from ship operators looking to reduce costs in challenging freight markets whilst a number of underwriters sit on healthy underwriting surpluses.”