27th May 2021
Challenging claims environment impacts London P&I Club result for 2020/21.
Client news
A challenging claims environment including increased claims on the IG pooling system and the effects of the coronavirus pandemic were factors which impacted The London P&I Club’s result for 2020/21. In a recent update to the membership, the Club reported a combined ratio of 136.8% and an overall operating deficit of US$20.3 million for 2020/21. The year-end free reserve stands at US$153.6m.
Ian Gooch, CEO of the Club’s managers (A Bilbrough & Co Ltd), explains:
“Our products for charterers and owners of smaller ships recorded positive underwriting results and we saw a 5.3% return on the Club’s invested assets. However, our mutual P&I business experienced a number of challenges. These included increased claims on the International Group Pool and deterioration in the costs of the already expensive prior years of 2018/19 and 2019/20. We also saw a higher frequency of retained claims last year with a number of those resulting from the pandemic. In short, claims costs have increased in five consecutive years to the point that in 2020/21 they were at twice the level we saw five years ago. This came at a time when rating in the sector was already approaching unsustainable levels.”
The Club’s update also reviewed positive developments from the recent P&I renewal. Its strategy had focused on increasing rates as well as deductible levels, including the setting of uplifted and bespoke terms for Members with challenging records. The Club is pleased to have seen strong support for its approach from the membership. The outcome of the renewal has paved the way for a material improvement in the Club’s combined ratio for the current year.
“The 2020/21 result falls outside the Board’s appetite for risk even in the current claims environment. This places even more importance on the measures we took during this year’s renewal process – and the further work which we have in hand - to ensure we continue to deliver top-class support to our Members from a robust financial base”, said Ian Gooch.
Ends
Notes to editors
Insuring a diverse range of shipowners and charterers, The London P&I Club is one of the world’s leading Protection and Indemnity Associations, providing P&I, FD&D and War Risks cover to our international membership. From tailored solutions to flexible insurance packages – all of our work is directed at meeting our members’ specific needs.
We are proud of our position within the International Group of P&I Clubs, where we play a key role in coordinating and promoting the collective, global strength of the P&I industry on behalf of the world’s shipowning community.
At the London P&I Club, we are committed to providing the best possible service to our members. High quality, responsive support is fundamental to the way we work. The interests of our members are protected by a specialised team with a world-wide reach, including experienced lawyers, former mariners and insurance professionals. The day-to-day operation of the Club is performed by our managers, A Bilbrough & Co Ltd.
We have offices in London, Hong Kong and Piraeus; in Seoul we co-operate on a range of P&I activities with AB Korea Co., Ltd - and we have a global network of correspondents, lawyers and surveyors, all of which ensures our provision of a high calibre 24-hour service to our members, wherever they are based.
www.londonpandi.com