Premiums across the marine protection & indemnity market will have to increase in the face of continued technical underwriting losses and the absence of any short-term recovery in investment markets, HSBC Insurance Brokers has said in its Protection & Indemnity Review 2002.
Premiums across the marine protection & indemnity market will have to increase in the face of continued technical underwriting losses and the absence of any short-term recovery in investment markets.
In its Protection & Indemnity Review 2002, HSBC Insurance Brokers says: "The clubs have witnessed a general downturn in investment income. Inevitably, this has eroded free reserves.
"In the case of some clubs, this has made little impact, but others are now facing potential difficulty, and some have taken the decision to post unbudgeted supplementary calls.
"One thing for certain is that premiums have to increase across the market as a whole, especially since there are few signs that investment markets will recover significantly in the short term. Free reserves will inevitably be eroded further."
HSBC Insurance Brokers marine division director Nigel Russell said: "Technical underwriting has been producing losses for the vast majority of clubs for some time now.
"Reliance on investment income from reserves as a sole source of positive income has made some clubs more vulnerable than others.
"On a stand-alone basis, the P&I market is hardening. General premium increases range from twenty to thirty per cent.
"The cost of reinsurance will increase, and almost all the International Group clubs have reserved the right to pass on the costs of reinsurance increases for the policy year beginning 20 February 2002."
