P&I Clubs have congratulated themselves on achieving their renewal goals and thanked members for their continued support, reports Seatrade Maritime News.
However, intermediaries involved in the increasingly frenetic run-up to Sunday’s deadline single out this year’s renewal season as one of the most fractious in recent memory.
Progress against strategic goals
Paul Jennings, Chief Executive of North P&I, said that despite the challenges of 2021, North had made progress against its “key strategic goals”. With a 15% hike, the Club had secured the necessary premium growth across both mutual and diversified lines of business, he said.
The West of England’s Simon Parrott, Underwriting Director, noted that “West has successfully achieved a targeted renewal strategy intended to counter the challenges posed by the consistent underrating in the P&I market and the growth of unpredictable major claims, all now set against a weak investment market”.
The West of England was the focus of this season’s most high-profile switch, with the departure of MSC, now the world’s largest container line. Although the separation has been reported as ‘amicable’, it ends a two-decades-long relationship. The group’s ships are believed to have been split between several other International Group Clubs.
This year’s renewals were always likely to be tense, following announcements from November of a series of double-digit premium increases. But the moves by Clubs were inevitable, according to sources, as mutual claims continue to climb.
Increasingly expensive claims
A whole raft of increasingly expensive claims have rocked the mutual setup, with container lines in the spotlight on major fires, parametric roll resulting in containers lost overboard and, of course, blocking key waterways. Ultra large boxships have also been involved in allisions with berths and gantry cranes.
In recent days, ferries and car carriers have caught the headlines too. Fire has threatened to overwhelm the Grimaldi-owned ro-pax ship, Euroferry Olympia, before she was taken under tow yesterday, bound for waters off Corfu.
Meanwhile, Mistui OSK Lines’s 2005-built Felicity Ace, with a payload of more than 4,000 luxury cars is drifting, crewless and on fire, south of the Azores.
Mis-declared or undeclared dangerous goods are another headache for mutual insurers. Such cargoes, often in containers, are thought to be the cause of a number of underdeck fires that could well have led to major casualties and possibly loss of life.
Legal wrangles over such claims can take years to sort out and run up legal bills sometimes running to many millions. However, technology companies insist that digital and sensor-based systems can now support navigators and shipboard staff as they cope with operating some of the largest and most sophisticated ships ever built.
The risk of parametric roll, for example, can be assessed, with appropriate warnings issued to navigators, all in real time. Yet sources point out that there are no incentives so far for owners to adopt such technologies, either on new or existing vessels.
An increasing number of hefty claims, therefore, are exceeding the 13-member International Group of P&I Clubs’ own risk-sharing arrangement covering claims of up to $100m. Above this level, the Group General Excess of Loss clicks in, providing the next layer of cover up to $2bn. But terms for renewing this reinsurance have also increased sharply, as more higher claims fall into this category.
This was one of the factors cited by various Clubs as they rationalised the basis for the premium increases which dismayed their members. Other factors included Covid-related issues, crew claims, and more International Group claims of between $10m and $100m.
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Source: Seatrade Maritime News