London: With just two months to go to P&I renewals on February 20th, negotiations are already proving tougher than usual this year, say insurance analysts. A number of Clubs are already seeking supplementary calls from their shipowner members who have faced a steady stream of annual increases over the last few years. In recently buoyant markets, they may not have baulked too much, but with earnings under pressure for the first time in several renewal years, the pressure is definitely on.
Experts say the Clubs are braced for eight hard weeks ahead. Not only must they cover recent rising levels of more expensive claims, but they also face having to report dramatically reduced investment returns which, in a good year, represent a significant part of annual revenue. On top of that, the 13 International Group Clubs, which pool claims between them in the range $7m to $50m, face sharply higher premiums for their layered reinsurance contract which covers high-level claims above $50m and provides so-called catastrophe cover up to $3bn.
P&I claims have been rising fast across the board but experts warn that Freight, Demurrage and Defence (FD&D) disputes are quickening as contractual negotiations become increasingly difficult. And P&I insurers are expecting the volume of FD&D disputes to continue rising in the months ahead. This insurance covers the costs of legal disputes involving all of the contracts related to building, owning, buying, selling, chartering, and repairing a vessel. [17/12/08]
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