Despite 2023’s subdued level of pool claims, protection and indemnity (P&I) clubs are poised to adjust their pricing upward in the February 2024 renewals in anticipation of potential claims inflation.
According to AM Best’s “P&I Clubs: Improving Underwriting Results but Further General Increases Needed to Keep Up With Inflation,” while P&I clubs have announced rate increases for 2024, these are not as steep as the previous year’s, where hikes reached up to 10%.
AM Best underscored the necessity for these increases to help P&I clubs achieve break-even underwriting results amid an inflationary economy and to safeguard against a possible upsurge in claims.
The report details the International Group of P&I Clubs’ reinsurance program renewal, which was finalized at a reduced rate. Notably, this renewal was completed without the reinsurers mandating extensive cyber and pandemic exclusions, which can significantly impact coverage terms and costs.
The balance between managing inflationary pressures and maintaining underwriting discipline will be a crucial theme for P&I clubs as they navigate the complexities of the current economic landscape and prepare for potential future risks.
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