The Lloyd’s List Podcast: Should shipping be singing the GI blues?
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On this week’s podcast, we are assessing the outlook for general increases, or GIs to those in the know, at the next P&I renewal round. The past two renewal rounds have seen most clubs ask for mid to high single-digit rises and early indications suggest we should brace for more, but significantly, a handful have explicitly rejected the notion of GIs altogether. We get the expert analysis from Mark Cracknell, head of cargo and marine at megabroker Marsh JLT Specialty, Stephen Hawke, managing director of Lockton’s P&I broker affiliate PL Ferrari and West of England’s chief executive Tom Bowsher.
AS MARINE insurance buyers know full well, late autumn is not just the season of mists and mellow fruitfulness, but also the time of year when P&I clubs set out their stalls ahead of the coming renewal round.
The tradition has been for each International Group affiliate to come out with a headline figure for how much of an increase each one is seeking in premiums between now and the renewal deadline of February 20.
Usually this has been by way of a so-called “general increase”, known in insurance jargon as a GI. That term refers to a flat-out percentage points rate rise that owners will be expected to cough up, across the board.
When times are good, as they were in the middle years of the past decade, this can even be a “zero GI”, which in plain English, rather than insurance-speak, means a price freeze.
But the past two renewal rounds have seen most clubs ask for mid to high single-digit rises. But significantly, a handful have explicitly rejected the notion of GIs altogether, and nowadays price on the basis of individual loss records instead.
In this week’s edition of the shipping podcast, we are going to take the temperature of the P&I world as it embarks on the latest iteration of this time-honoured annual ritual.
Early indications are that the thermometer is rising. The first club to declare this year has been West of England, which is pushing for a 15% GI. That alone is newsworthy, ranking among the highest for any IG club in recent years.
So we are particularly pleased that West chief executive Tom Bowsher has been brave enough to come on the show, explaining why his board decided on the move.
We also have one of his critics. Mark Cracknell, head of cargo and marine at megabroker Marsh JLT Specialty, is a man happy to stir things up in the usually collegiate world of P&I. In the past, he has accused clubs of being overcapitalised, and has called for them to consolidate into half a dozen larger entities.
He has authored a paper — due for imminent publication — putting the case that the very idea of GIs is a thing of the past, and that all clubs should price on record.
We are also joined by Stephen Hawke, managing director of Lockton’s P&I broker affiliate PL Ferrari, one of our regular podcast guests, who is renowned for his shrewd insights on the P&I sector.