Marine P&I clubs urged to hike rates

Marine protection and indemnity clubs need to increase rates for shipowners due to a rise in claims across the sector, the London-based U.K. P&I Club said Wednesday.

The comments came as the U.K. P&I Club confirmed it has had its rating downgraded to A- from A by ratings agency Standard & Poor’s Global.

The P&I sector’s unsustainable premium rates led to an average combined ratio across the sector of over 120% last year, the U.K. Club said in a statement.

“The market now faces increasing Pool claims and reinsurance costs as well as a steady flow of COVID-19 claims. As such, rates across the sector will need to increase accordingly,” it said.

The protection and indemnity sector is dominated by members of the London-based International Group of P&I Clubs, which consists of 13 P&I clubs that collectively provide marine liability coverage to about 90% of the world’s oceangoing tonnage.

Andrew Taylor, CEO of Thomas Miller P&I Group, said in the statement the club was disappointed S&P had revised its rating, but that the marine mutual remains in a strong financial position with robust reserves.

“The estimated cost of Pool claims is the largest in history; this, coupled with premium levels that have failed to keep up with rising claims, has resulted in this change of rating from S&P,” Mr. Taylor said.

The combined ratio deterioration across the sector has placed pressure on ratings and resulted in most International Group clubs being placed on negative outlook.