Ship owners are facing a more modest range of general increases – at 4.54% on average – on their protection and indemnity (P&I) premiums at the annual February renewal, as predicted by Aon in its Mid-Term Review (published 20 August 2009). The global insurance broker forecasts that the 2010 round of increases will generate an extra $159 million for P&I clubs in its P&I 2010 Pre-renewal report, launched today.
Despite the seismic upheaval in the world’s economies, Aon suggests that the mutual market had been steadily, over recent renewals, getting to grips with basic fundamentals of underwriting to near balance and reducing reliance on investment income. A number of clubs resorted to additional supplementary calls to reflate their balance sheets and a number down risked their investment stategy too late. Nevertheless, Aon believes that the reinforcement of these fundamentals has aided recovery.
Aon cautions that events of the last 18 months have starkly exhibited that the mutual system is over sensitive to external forces. Large claims (in excess of $7 million) for 2009, at this very immature stage, already show a level that could, potentially, outstrip 2006 and 2007.
Stephen Hawke, head of Aon’s marine liability team, commented: “The early outlook for the medium-term is cautiously positive. Absent catastrophic world events we would suggest low single digit increases for renewals in 2011 and 2012.”
