The protection and indemnity (P&I) market will suffer higher reinsurance costs, more limited P&I war cover and significantly lower revenue from investment income in the year ahead, global insurance broker Willis has warned.

In its P&I market review for 2001/2002, Willis says world events, including the terrorist attacks last September, have "overshadowed the underlying evolution and continuing change in the P&I market".

The broker points to a trend of consolidation and "strategic partnerships", particularly where weaker clubs are involved.

It notes that weaker clubs will have to address premiums and/or resort to unbudgeted supplementary calls in the face of rising reinsurance costs and a claims experience that is unlikely to improve.

It adds that the number of A-rated insurers offering fixed premium P&I to owners of large ships has declined from five to one over the past year and that "2000/2001 looks set to see a nine-year low point in overall market results".