Marine protection and compensation clubs must increase tariffs for shipowners amid an increase in claims in the industry, the London-based UK P&I Club said on Wednesday.
The comments came as the UK P&I Club confirmed that its rating had been downgraded from A to A- by the rating agency Standard & Poor’s Global.
Unsustainable premium rates in the P&I industry led to an industry-wide average combined ratio of over 120% last year, the UK Club said in a statement.
“The market is now facing an increase in pool claims and reinsurance costs as well as a constant flow of COVID-19 claims. As such, rates across the industry will need to increase accordingly, ”he said.
The protection and indemnification industry is dominated by members of the London-based International Group of P&I Clubs, which consists of 13 P&I clubs that collectively provide marine liability coverage to approximately 90% of the world’s ocean tonnage. .
Andrew Taylor, CEO of Thomas Miller P&I Group, said in the statement the club were disappointed that S&P had revised its rating, but the maritime mutual remained in a strong financial position with solid reserves.
“The estimated cost of Pool claims is the highest in history; this, along with premium levels that have not kept pace with the increase in claims, has resulted in this rating change for S&P, ”said Mr. Taylor.
The deterioration in the combined ratio across the industry put pressure on ratings and led most clubs in the International Group to be placed under negative outlook.