The Daily View: In praise of P&I
Your latest edition of Lloyd’s List’s Daily View — the essential briefing on the stories shaping shipping
MARINE insurance was probably never the subject of a question on Family Fortunes. But if the show’s famous ‘we asked 100 people…’ format had ever been applied to the topic, the most common response would probably have been ‘something that happens at Lloyd’s’.
Public awareness of the P&I niche is less than minimal. But it is one of the unsung underpinnings in world trade, and British companies still play an outsized role.
Well, I say companies. Technically, the 12 affiliates that make up the International Group of P&I clubs are actually not-for-profit businesses, rooted in the Victorian ethos of mutuality.
They exist solely to provide the shipowners who make up their members with the best possible service at the lowest possible cost, and they do a damn good job of it.
As a presentation from NorthStandard attended by Michelle Wiese Bockmann and I earlier this week made clear, it is also expected to act as police force for Western sanctions on Russia and Iran. After that, your humble servants both made convivial use of the free bar.
But the clubs unfailingly comply with their duties, without recompense for the financial detriment they suffer in terms of the resultant lost business.
The P&I world is also an upholder of maritime traditions. Each year, the liability insurance on 85% of the world fleet by tonnage — it was 90% before sanctions saw hundreds of tankers depart for the dark fleet — renew their liability insurance contracts to a hard deadline of February 20.
That date was chosen in the era of sail when it marked the day on which Baltic ports were deemed free of ice. There’s no compelling reason that it should remain in place in the 21st century, other than it is the way things have always been done, and if it ain’t broke don’t fix it.
December, January and the first three weeks of February are dubbed ‘the renewal round’, when clubs, owners and brokers acting on behalf of owners sit down and hammer out terms.
Lloyd’s List typically tries to find out what is going on, publishing two or three round-ups based on conversations with our underwriting and broking contacts.
As I report today, things seem to be going pretty well. Most clubs are asking for general or target premium increases in the order of 5%, give or take a percentage point or two, and seem to be getting it.
That’s a contrast to the hull & machinery insurance market, in which a plurality of contracts renew on January 1. There are widespread reports of insurers offering discounts of 10%-15% just to hang on to market share.
Things may be going slightly slower than usual, thanks to factors such as an early Chinese New Year. Or they may not be, depending on who you ask.
But the consensus seems to be that something like 40% of deals by premium value have already been concluded, and there seems little risk of not getting that up to 100% in the remaining three and a bit weeks.
We’d just like to say thank you to our P&I industry readers for making it all happen.
David Osler
Law and marine insurance editor, Lloyd’s List