Financially, the International Group (IG) market is in the healthiest state in its history. All clubs which are subject to the capital requirement provisions of Solvency 2 are likely to satisfy these measures on implementation in 2016...
The following comments relate to the combined financial year results of the individual clubs in the International Group. The only club excluded from this analysis is the Swedish Club, which reports on a basis materially different from the rest of the market. As the Swedish Club represents less than 2.5% of the IG P&I market, its omission does not affect the overall analysis materially.
Gross paid claims were stable in 2014/15 maintaining the record high level for the IG market (nearly USD 3.4 billion).
Net paid claims reversed the previous year's result almost exactly, by increasing by 6.4% (net paid claims reduced by 6.3% in 2013/14). Net incurred claims however reduced by 3% compared to the previous 12 months...
With a 4% increase in total market premiums and a 3% reduction in net incurred claims it is little surprise that the overall underwriting result of the market improved materially in 2014/15. The surplus in 2014/15 was roughly the same as the underwriting loss the previous year (USD 80 million)...
Investment markets remained uncertain through 2014/15 and the returns were on average reduced compared to 2013/14. The average P&I club investment return in 2014/15 was 2.9% (3.7% the previous year)...
Reinsurance and Pooling costs represent approximately 40% of average P&I premiums paid by ship operators (although in some sectors the fixed costs can account for in excess of 85% of premiums).
This section outlines the market results in this area, discusses the trends and suggests a potential change to the system that may increase transparency and fairness of distribution of the costs to ship operators.
Reinsurance and Pooling costs represent approximately 40% of average P&I premiums paid by ship operators (although in some sectors the fixed costs can account for in excess of 85% of premiums).
The current year (2015/16) figures as at August 2015 are around the same level as 2014/15 was at the same point last year. It is clearly much too early to make any sensible predictions about the eventual cost of the current year.
Increased retentions both by the individual clubs and the IG pool have exacerbated the impact of large claims volatility. Since 1991 the maximum pool limit has increased from USD 10.4 million each claim (in excess of a USD 1.6 million individual club retention) to the current limit of USD 71 million each claim (in excess of a USD 9 million individual club retention).
The main aim in the Willis analysis of club report and accounts has been consistency. Although there are still variations between the way clubs report, we try as far as possible to compare 'like with like' and to apply the same approach year after year.
We simplify and summarise certain aspects where information is available and adopt the same approach for all clubs. A glossary of terms is provided below.
For well over 10 years Willis has argued for reductions in release calls. This issue has gained increasing traction and average market release calls have reduced year on year for the last seven years.
This section outlines each club's release calls, discussing them in the context of current market averages and historic exposures.
Read moreWe have included a table below setting out the release call percentages announced by each of the International Group (IG) clubs as at 30 November 2015.
Read moreIt is pleasing to note that release call levels have again improved during 2015. This follows the pattern over the previous 6 years and the hope is that this trend will continue.
Read moreFollowing over 20 years of volatile financial performance, the P&I mutual market has experience a period of relative calm over most recent 6 years.
Following over 20 years of volatile financial performance, the P&I mutual market has experience a period of relative calm over most recent 6 years. Read more
The following three graphs display a direct comparison of each club's deferred call performance, using the percentage variation measure, on average over three periods; 5 years, 10 years and 15 years. Read more
Willis' predicted during the period of uncertainty in 2008, when almost half the market made unbudgeted calls, that we did not expect this particular problem to spread to the stronger half of the market. Read more
The reference table shows the original and current estimates for the deferred calls of all the clubs from 1998/99 to 2015/16. Read more
The Non-International Group (IG) market has experienced considerable change in the last 10 years. In 2015 there has been significant growth in the capacity available from the Non-IG market. The number of insurers providing USD 1 billion limit of liability has increased to six, with Hydor, Lodestar, Navigators P&I and RaetsMarine joining British Marine and Ingosstrakh in the ability to offer the highest Non-IG limit of liability.
British Marine is the largest fixed premium P&I provider within the non-IG market having insured 10.6 million gross tons in the latest year..
Read moreCarina is a fixed premium P&I provider managed by Tindall Riley, which has been underwriting since 2013 as a coverholder for various Lloyd's Underwriting syndicates. Carina is based in London, but benefits from Tindall Riley's global network of correspondents.
Read moreEagle Ocean Marine provide fixed premium solutions for both P&I and Freight, Demurrage and Defence to limits of liability up to USD 500 million and USD 2 million respectively.
Read more