- Over half of the 13 International Group (IG) of Protection and Indemnity clubs could ask for a general increase in premium at the 2020 renewal.
- However, if the first clubs to announce renewal pricing do not increase their premium, some may follow their lead.
- The difficult 2018 policy year will also mean fewer clubs can return excess profits to members and will reduce the size of any returns made.
LONDON (S&P Global Ratings) Oct. 15, 2019--In a report published today, S&P Global Ratings said it expected to see some IG clubs increasing their premium calls in 2020. That said, a series of early announcements from clubs offering zero general increases could force a rethink at the other clubs (see "P&I Clubs Likely To Take Their Cue From The First Renewal Announcements").
In the financial year ending February 2019, the average combined ratio for the IG clubs was 110%, indicating a substantial underwriting loss. The IG as a whole recorded a loss before tax well over $200 million. However, capital at most of the IG clubs still exceeds the 'AAA' benchmark in S&P Global Ratings' capital model.
During October, the IG clubs--mutual associations that provide protection and indemnity insurance to 90% of the shipping industry--traditionally announce the level of general (premium) increase that members can expect to be quoted to renew their policies. Most are likely to recommend a general increase for the February 2020 renewal to their boards.
Historically, most clubs have recorded an increase just below the level announced in the previous October, at the beginning of their renewal season. The renewal announcements therefore provide a solid indication of whether a club's renewing premium will rise or fall in the next year.
This report does not constitute a rating action.
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|Primary Credit Analyst:||Robert J Greensted, London + 44 20 7176 7095;|
|Secondary Contact:||Mark D Nicholson, London (44) 20-7176-7991;|
|Additional Contact:||Insurance Ratings Europe;|
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