Marine mutual insurers are implementing rate hikes for 2025 in response to increased claims costs and inflationary pressures, which the industry says reflects the challenges of maintaining financial stability in a volatile environment.
The American Steamship Owners Mutual Protection and Indemnity Association (American Club) has announced a targeted 7% increase in risk pricing on expiring rates for all classes of its business. The decision follows a renewal period where premium income growth outpaced tonnage, aligning premium rating levels more closely with the current risk landscape.
The club cited rising claims severity within the pool, inflationary pressures on liability claims, and higher-value casualties in 2024 as key factors necessitating the adjustments.
In a report from AM Best, the club noted that losses for the 2024-2025 policy year are developing at higher-than-anticipated levels, driven by significant claims at both the pool and retention levels, though attritional exposures remain slightly below budget.
To address this, the club is maintaining a release call margin of 20% over the total estimated premium for the year.
Similarly, the Swedish Club has set a 5% general rate increase for the 2025-2026 policy year, which it described as a proactive measure to address rising claims costs and maintain financial resilience. The club reported a stable mutual P&I portfolio despite a slight overall tonnage decline, with net positive tonnage inflow in the first half of the year.
While claim frequency remains consistent, the club noted an uptick in large claims, particularly those pooled within the International Group of P&I Clubs. It also cited inflationary pressures driving attritional claims beyond budgeted levels.
The Swedish Club highlighted geopolitical tensions and market volatility as potential sources of future claims turbulence. Despite positive investment returns over the past two years strengthening its financial position, the club expressed caution about ongoing economic uncertainties and unpredictable markets.
Meanwhile, the London Steam-ship Owners Mutual Association (London Club) is targeting a 5% increase in overall average rates to address higher-severity claims and inflation. While noting improvements in technical performance due to rate adjustments and sustainable deductibles, the club emphasised the need for equitable contributions from its members.
It stated that renewal terms will be based on individual member loss records and risk profiles, with specific attention to fleet rating adequacy and deductible levels. The club also noted that adjustments to the cost of the International Group's excess loss reinsurance program, yet to be determined, will be applied as necessary.
Britannia Group is also planning a 7.5% rate increase for renewals, citing higher-severity claims impacting its financial results.
Similarly, NorthStandard Ltd is implementing a 5% rate hike on certain classes to address a return of large claims exceeding US$1 million, following two years of relatively benign claims experience.
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