Marine protection and indemnity P&I mutual insurers faced increased claims in the 2024-2025 fiscal year, driven by a higher level of claims activity after two relatively quiet years and the Baltimore bridge disaster in March.
These developments added pressure on reinsurance rates for the upcoming year, according to the International Group (IG) of P&I Clubs.
The IG finalized the pooling and group excess of loss reinsurance contract structure for the 2025-2026 policy year.
The main excess of loss program will maintain coverage at $2 bn in excess of $100 mn for the first three layers, the IG announced.
The rate adjustments include a 23.6% hike for fully cellular container coverage, an 8.9% rise for clean tankers, and a 3.8% increase for chartered tankers.
Mike Hall, chairman of the IG’s reinsurance committee, described the renewal process as challenging due to the Baltimore bridge loss. However, he credited constructive negotiations with Axa XL and other reinsurers for achieving a fair outcome.
“The group values its strong relationships with reinsurers, and the timely renewal on equitable terms reflects this partnership,” Hall stated.
Claims activity in 2024 was more in line with 2019-2021 levels, marking a return to higher claims after two benign years. Additionally, an active hurricane season posed challenges for reinsurance partners.
Mike Hall, chairman of the IG’s reinsurance committee
The IG highlighted the importance of its excess of loss coverage in providing unlimited risk coverage for most insured risks. The renewal also benefited from the continued support of program leader Axa XL and other reinsurance partners.
Excess war P&I coverage was renewed for 2025-2026 for 12 months, with rates included in shipowner charges. Due to the Russia-Ukraine conflict, reinsurers maintained territorial exclusions for affected waters, consistent with primary war P&I coverage exclusions.
To address these risks, the IG secured aggregated sublimited coverage of $100 mn for Russia/Ukraine/Belarus exclusions. In the negotiations taking place on contract renewal, it has turned out that the international insurance industry is no longer willing to agree on coverage for Russia and Belarus, and the options for coverage in Ukraine are also very limited.
Since it began, the Russian aggression against Ukraine has led to numerous economic changes, the scope of which still cannot be fully assessed.
The insurance industry’s core business was affected by the consequences of the war from the start. In the beginning, there was the withdrawal of “Western” reinsurers from the Russian market, followed by the self-isolation of the Russian insurance market and the interruption of cross-border payment flows due to the declaration of martial law in Ukraine.
The marine mutuals announced rate increases for 2025, driven by inflation and rising losses. The American Steamship Owners Mutual P&I Association implemented a 7% targeted rate increase across all classes of business.
The Swedish Club introduced a 5% general rate hike, calling it a “proactive adjustment” to manage rising claims costs, ensure adequate premiums, and maintain financial stability.
