NU Online News Service
The protection and indemnity insurance market bounced back this year, up from negative earnings a year ago, thanks to the improved investment picture, but claims are eating into underwriting earnings.
In a report released by insurance broker Willis Group, "Protection and Indemnity Market Review 2010/2011," P&I insurance market bounced back to a gain of $680 million in 2009-2010 after record losses of $840 million in 2008-2009.
P&I insurance provides ship owners with marine legal liability coverage. The market is held by P&I clubs, or mutual insurance companies that provide liability coverage to ship owners and charter members. The report examined the International Group, an association that arranges the collective insurance and reinsurance to the 13 P&I clubs.
Across the whole P&I market, the report said underwriters almost broke even with an overall underwriting loss of 1 percent for the 2009-2010 financial year. However, the result was achieved against a historic level of claims during the period that increased to 12.5 percent.
Premiums for the market rose 5 percent, but the report forecasts a soft renewal season for 2011.
The cost of individual claims is continuing to increase, the report said, which is not a surprise as the economy begins to rebound.
In a statement, Ben Abraham, leader of the Willis P&I division, noted that the market made a "spectacular comeback." However, claims remain a concern, not so much because of a surge in large claims but because of the "increasing cost of more routine claims."
As for the performance of the P&I clubs, the report said the larger individual clubs have underwriting surplus of 7 percent. By contrast, the worst performers were running a deficit of 23 percent.
"While two-thirds of clubs in the market are performing close to balance, a minority of clubs still have some way to go to break even," said Abraham.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
