North P&I Club announced its intention to apply a 10% General Increase in 2023/24 premium rates amid swirling economic uncertainty and mounting inflationary pressures. The current benign marine insurance conditions within P&I should not deflect the sector from seizing an opportunity to prepare for turbulent times ahead, according to North.
The global marine insurer’s Pre-Renewal Report 2023 describes a club in robust shape as it heads towards its merger with Standard Club to establish NorthStandard as a new force in global marine insurance from February 20th next year.
Despite the war in Ukraine, sharply rising energy and commodity prices, and the combination of weakened economic growth and post-pandemic supply chain pressures on shipping, North reports fewer claims and lower claim values through 2022. COVID-19 related crew claims are down, while the period has seen only one International Group (IG) pool claim recorded.
Based on its YTD experience at the six-month point, North projected a 20 February 2023 combined ratio of below 100%. However, the pattern on which the forecast was based is not expected to continue beyond the end of 2022, as trade adjusts to distortions caused by the war in Ukraine and inflationary pressures.
With these factors in mind and the impact of investment losses during a period of market volatility, the Club has announced a call for a 10% General Increase in North’s P&I premium rates for the 2023/24 policy year.
We can only reasonably conclude that we are currently in the ‘eye of the storm’, with the traditional drivers of claims costs – rapidly rising inflation, commodity and shipping indices – all pointing to a more turbulent future,
…commented James Tyrrell, Chair, North.
The challenges of fluctuating markets had been felt in falling investment returns, North’s pre-renewal report indicated, where its portfolio declined by 6.36% in the period to the end of October 2022.
It is clear that actions taken at the 2022 renewal put the Club on a more sustainable footing, but there can be no complacency as inflationary pressures intensify,
…said Thya Kathiravel, Chief Underwriting Officer.
While applying the 10% general increase, individual Member renewals will be negotiated based on detailed assessments of performance, claims records and risk exposure in the usual way, said Kathiravel. However, he added that a general premium rating increase of 15% would be applied to all FD&D risks written for the 2022/23 policy year.
