Aon predicts P&I rate rises

International

Although the marine protection and indemnity (P&I) clubs, which provide third party liability cover to their shipowner membership, are in pretty good financial shape right now, shipowners are advised to brace themselves for an increase in their premium or subscription payments at the February 2007 renewals, according to a mid term review of the sector by Aon Marine (the P&I division of broker Aon). Aon says that a wave of social and regulatory legislation for the marine industry will have the inevitable result of increasing liabilities and therefore the potential for claims. The legislation includes stricter measures around marine pollution, increased solvency requirements and higher reinsurance costs for the clubs. Stephen Hawke, executive director of Aon Marine, explains that overall solvency of the clubs was currently quite high as a result of rate increases of up to 12.5% at the 2006 renewals. “In days gone by, the clubs would have seen if the impending storm could be weathered before taking any financial change of course. Nowadays the highly regulated clubs must take preventative action in advance,” he says. Aon anticipates that the P&I clubs will increase rates for the next two renewals up to and including February 2009.