Tough times test insurers' bonds with shipowners
Poor shipping markets and a string of disasters have drained owners and insurance clubs, setting the parties up for intense premium talks
Two costly maritime disasters, a surge in insurance premiums and harsh shipping markets will make this year's marine insurance renewal season among the toughest ever, straining ties between shipowners and insurers, shipping experts say.
This could see shipowners ditch their existing protection and indemnity clubs (P&I clubs), which cover third-party liabilities, in favour of cheaper operators. But owners still might have to pay the higher fees due to the clubs' lock-in clauses.
The poor state of the shipping market means some owners will find it difficult to afford the higher premiums charged by the top P&I clubs, which are raising premiums by 5 per cent to 16.5 per cent. Reinsurance premiums will also increase by 30 per cent to 35 per cent on February 20, the traditional date for all P&I renewals.
Richard Walker, chief executive of Hong Kong marine insurance broker Risk Exchange, said: "It's going to be a tough marine renewal season for everybody."
He said the P&I clubs, which insure ships against the cost of collisions, deaths and cargo damage and pollution, "need to make money and shipowners can't afford it".
Walker and other insurance sources said there would be tough negotiations on both sides but the P&I clubs were likely "to stand firm" on the size of increase.
One insurance source said the actual premium paid would depend on an owner's claims record and related information. But the rise in reinsurance premium alone is likely to be about US$34,000 for a supertanker.
