Broker predicts increases in high-value claims
Protection and indemnity (P&I) clubs need to improve their underwriting discipline and stop relying on investment income, Aon has warned.
Aon’s P&I mid-term review said P&Is had suffered battered investment portfolios in the credit crunch, especially as they had relied on equities.
The broker said P&Is were coping with higher claims volumes and would need to increase their premiums up to 7.5%.
Aon did not give a figure for claims volumes but said the increases were concentrated at the high-value end, typically worth more than $7m (£4.3m).
Head of marine liability Stephen Hawke said: “P&I clubs can’t be blamed for the unpredictable, but can grasp control of their own underwriting and investment strategies.
“The inability to predict the inherent volatility of the modern world is excusable.
“What is not is a persistent inability for clubs to control the controllable by continuing to run underwriting deficits, while the comforting safety net of investment income had been rudely cut away.
“Aon has consistently preached the virtues of underwriting discipline and warned of the addictive vice of investment income dependency.”