In most cases, the increased premiums which shipowners are being asked to pay by their P&I clubs are justified, and are a vital factor in maintaining a solvent marine mutual market, says Michael Butler, an insurance partner at, Moore Stephens.
Writing in Bottom Line, a shipping newsletter, Butler says: “Strong freight markets and a generally buoyant shipping industry, do not translate, historically, into lower P&I premiums. The more ships there are trading, the greater the scope for a potential increase in casualties. Put bluntly, more ships must inevitably mean more claims. And if the cost of meeting claims increases, then so must the premiums.
Butler adds that most clubs are now ready for Solvency II, saying: “That fact alone should serve as a singular reminder that the clubs generally are in good financial health. And if the price to be paid for that is increased premiums, it might be deemed a price worth paying.”
