HSBC: P&I Clubs Must Improve Underwriting Performance

Thursday, January 02, 2003
Inferior underwriting results and inadequate or even negative investment income continue to haunt P&I clubs, says Lloyd's broker and P&I specialist HSBC Insurance Brokers in its Protection & Indemnity Review 2003. HSBC says the market environment for the traditional February renewal will be hard. "Realistically," it notes, "there is some way to go before the clubs move back into an underwriting surplus, or even underwriting balance."

HSBC says the clubs relied too heavily on investment income made during the long bull markets of the 1990s which, rather than being regarded as a bonus and employed to bolster free reserves, was instead used to subsidise new underwriting business. It adds that the clubs were more assiduous in their quest to attract new business or tonnage at the expense of existing and established members, whose money had been used to earn the healthy investment returns in the first place. Nigel Russell, Managing Director of the Marine Division of HSBC Insurance Brokers, concludes, "The plain and simple fact is that the clubs must improve underwriting performance. They must also bolster free reserves, and cannot rely on investment income."

HSBC also predicts that, if there is a serious stand-off between the International Group of P&I Clubs and the lead underwriters of the Group reinsurance contract, it is quite probable that the pool limit will be increased from its current level of $30m. "Even the smaller clubs should be able to withstand an increase in pool limit, even if it were to be doubled," says the broker. "The smaller clubs would find it far harder to withstand a significant increase in retention. Only four clubs do not buy separate reinsurance to protect their retention of $5m, and these four are amongst the strongest in financial terms. All the smaller clubs buy reinsurance to protect their retention. This low level of reinsurance is costly and is likely to be more costly and harder to buy in the immediate future. A significant increase in retention could be detrimental, especially to those clubs with a lower capital base."

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

N-KOM Lays Keel for Qatar’s First Liftboat

Nakilat-Keppel Offshore & Marine (N-KOM) has achieved another milestone with the keel laying of its first liftboat newbuild project, awarded in July 2014 by long-time

Master Fined After Wind Farm Collision

The master of a wind farm support vessel has today been made to pay £3,000 in fines and costs after pleading guilty to breaches of maritime collision regulations.

Bureau Veritas Diversifies with MatthewsDaniel Acquisition

Bureau Veritas announced today that it has acquired MatthewsDaniel Ltd, a global provider of loss adjusting and risk assessment services for the offshore industry.

Finance

Norwegian to Buy Prestige Cruises in $3b Deal

Norwegian Cruise Line Holdings Ltd (NCLH.O) said it would buy Prestige Cruises International Inc from its owner Apollo Global Management LLC (APO.N) in a $3 billion

Master Fined After Wind Farm Collision

The master of a wind farm support vessel has today been made to pay £3,000 in fines and costs after pleading guilty to breaches of maritime collision regulations.

Statoil, DNV GL Drive Subsea Factory Interface Standardization

Statoil has entered into an agreement with DNV GL to establish an industrial cooperation to introduce an international industry standard for subsea process technology.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Navigation Pipelines Pod Propulsion Salvage Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1233 sec (8 req/sec)