The Lloyd’s List Podcast: 2023 P&I renewals uncovered
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Our Victorian shipping forebears designated twelve noon on 20 February each year as the notional time and date at which Baltic ports became ice free, and that has given birth to one of the great traditions of marine insurance. Two centuries later, midday on 20 February still marks the hard cut-off point by which the vast majority of shipowners must have in place cover for liability in everything from collisions and spills to seafarer injuries and deaths. Without protection and indemnity policies, ships cannot trade. No state wants uninsured vessels transiting its territorial waters and no port will admit them without the guarantee that costs will be met if things go badly wrong. For around 90% of the world fleet, P&I cover is provided by one of 13 P&I clubs, as these not-for-profit mutual monoline insurers are known. Through their trade association the International Group, and an elaborate scheme of retentions, pooling, captives and reinsurance almost beyond mortal ken, ensures that cover can run as high as $2bn and beyond in the worst cases, for very modest cost. The workload of renewing policies cannot be evenly spread throughout the year, even for the sake of an easy life. But even so, each contract has to be concluded within the established time limit. That leaves us with the renewal round. While a few straightforward deals get signed off towards the back end of each calendar year, things only really get going after everybody has recovered from the Christmas and new year break. Sometimes negotiations go right to the wire. This year the process has seen multiple complications, as we shall hear in this week’s edition of the Lloyd’s List shipping podcast. Progress has been unusually tardy, for reasons that we’re going to discuss. Clubs have had to contend with booked but unrealised investment losses thanks to turbulence on the financial markets, which has led to downgrades from ratings agencies. Then there is the sensitive matter of pricing. P&I clubs are not for profit, but they do have to bring in sufficient premiums to keep the show on the road. 2023 marks the fourth successive year of substantial premium hikes, with a 10% going rate. Unsurprisingly, some owners have been reluctant to cough up. To add to the complexities, two of the 13 International Group affiliates, North and Standard, are due to merge. When? Well, noon on 20 February. That has seen some big boxship players split their fleet to avoid over-reliance on the combined entity. Lloyd’s List prides itself on the best marine insurance coverage anywhere, and our insurance editor David Osler has been busy talking to some of the key players in the sector. Our podcast guests today are two brokers and two club chief executives. The former are Stephen Hawke, managing director of PL Ferrari & Co, and Alex Vullo, executive director of Gallagher. The latter are Andrew Cutler of Britannia and Jonathan Andrews of Steamship, who takes over from his predecessor Stephen Martin on … you’ve guessed it … 20 February.