The first virtual P&I renewal has been completed; a unique experience for clients, P&I Clubs and ourselves!
The virtual renewals were overall a success, although, as anticipated negotiations did take much longer than previous years and started much later – with many Clubs trying to push renewal negotiations to after Christmas for a large proportion of the membership. Nonetheless, both members and Clubs did acknowledge the need to support one another, balancing the Club technical requirements against member and wider commercial realities in the market.
I assume all Clubs will deliver messages of increased premiums but there’s doubt any will give a definitive number. Compromises were made - there was consolidation and de-risking of some members where adverse records persist. We hear that overall increases were achieved, with renewed focus on deductible increases, however was this robust/ de-risking approach worth it?
When the Club results appear, it’s seems pretty set that we will see some increased free reserves as a result of the ‘stable’ investment markets. We anticipate that combined ratios will remain high, as one compromised general increase will likely have a limited impact on the overall market technical performance.
Of course, and as the Clubs often remind us, the volatile nature of large claims will greatly impact the results. 2019 and 2020 are expected to be very costly and we’ll keep a close eye on how results continue to develop. Additionally, the full extent of the recent claims period is still unclear - one key development we are aware of is the potentially three large container claims, which could result in significant losses that further impact the 2020 policy year.
The Group sub-committee will, however, point out that a separate reinsurance category has been introduced for this category of vessel. Indeed the Group reinsurance is in the middle of a two year deal expiring 20/02/2022 but I am sure this may well prove a challenge next year, when you consider the likely of further General Increases and a hardening market landscape.
With expected increased reserves, the same message from last year still remains prevalent – more cash needs to be returned to members. Talking to some Club managers who completely understand this view, are of the opinion that ‘cash’ should be given at renewal – rewarding those loyal members with good records, rather than across the membership. An interesting debate and something that we’ll be paying close attention to!
At the time of writing this update, 20 million + adults have been vaccinated in the UK1 and a roadmap to normality, albeit with a number of checks and balances, is on course. With reference to this, at Gallagher we remain hopeful that a return to office happens this year, with our teams and colleagues in a position to start safely visiting our clients and partners in the near future.
Our relationships with our clients and IG Clubs are paramount and I believe it is these strong relationships that made the ‘virtual’ renewal manageable, and indeed successful. We maintained 98.5% of our existing business over renewal and I say a big thank your continued support, which is never taken for granted. In addition, we were delighted to welcome a number of new clients from around the globe.
We have learnt the value of video calls/meetings and webinars, and we will maintain these technological tools, in support of our personal visits. Whether it be virtual meetings for now or face-to-face meetings in the near future, it’s vital we continue to maintain and enhance our service and offering to all our international Marine clients.
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This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 10.03.21, but you will recognise that matters concerning COVID-19 are fast changing across the world. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Gallagher.