Willis: Underwriting Discipline Comes to P&I Coverage

The Protection and Indemnity (P&I) market, a broad type of Marine Legal-Liability coverage, delivered a blockbuster financial performance last year—but predicted poor investment returns and increased claims will spell premium increases for 2012.

In a 50-page “2011 Protection and Indemnity market report” issued by Willis Group Holdings, the insurance broker says the 2010-2011 period was benign for claims compared to the previous year. Paid claims were down more than 11 percent against 2009-2010, although the report notes claims are still high in this market.

When combined with stable income levels, P&I produced an overall market-underwriting surplus of 3 percent, the highest underwriting profit ever recorded by the market.

Meanwhile, the market reported a respectable 6.5 percent investment return, which, combined with the positive underwriting result, propelled free reserves to a new record level at Feb. 20, 2011. This represented a 22 percent increase from the position at the end of the previous year, says Willis.

Nevertheless, Willis says 2012 renewals will see an average rate increase of 4.25 percent, up from 3.42 percent in 2011.

NAPSLO 2016

 

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