Willis Report: P&I Insurance Market Makes a Record Comeback
Behind the Positive Results, Record Claims Levels and Continuing
Gap Between Best and Worst Performing Clubs Could Present Challenges in 2011
London, UK, December 14, 2010 – Investment income in the Protection and Indemnity (P&I) insurance market, which
provides shipowners with marine legal liability coverage, bounced back to $680 million in 2009/10 after record
losses cost the market $840 million in 2008/09. This is according to a new report from
Willis Group Holdings (NYSE: WSH), the global insurance broker, which warned that despite good underwriting results,
record claims levels and a continuing gap in the performance of individual P&I Clubs could present
challenges for the market in 2011.
The Willis P&I Market Review 2010/11 which can be read here, analyses the overall results
of the International Group, an association that arranges the collective insurance and reinsurance for 13 P&I
Clubs – insurance mutuals that in turn provide liability cover for their shipowner and charterer members.
Across the P&I market as a whole, Willis said that underwriters almost broke even, with an overall
underwriting deficit of only 1 percent for the 2009/10 financial year. This result was achieved against
the highest levels of claims in the market’s history with a 12.5% increase in total incurred
claims on 2008/09.
Ben Abraham, who leads the Willis P&I division, said, “After one of the worst years on record,
the P&I market made a spectacular comeback in 2009/10 with total assets and free reserves representing
all time record highs for the International Group. In contrast to this positive news, claims are
similarly at an all-time high, worryingly not due to a surge in very large claims, but
to the increasing cost of more routine claims.”
The Willis report noted that the variance in performance between individual Clubs also continues to be marked
with the largest individual club having an underwriting surplus of seven percent in contrast to the
worst deficit which was reported at 23 percent.
Explaining what this could mean for the market, Abraham said, “While two thirds of Clubs in the
market are performing close to balance, a minority of Clubs still have some way to go
to break even. Imminent widespread unbudgeted calls are unlikely, but the underperforming Clubs are inevitably more
vulnerable to fluctuations in claims or investment performance.”
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers
professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public
entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries,
with a global team of approximately 17,000 employees serving clients in virtually every part of the
world. Additional information on Willis may be found at www.willis.com.
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