While the mutual marine market continued to face competition from commercial insurers in the fixed premium market, in several cases the clubs had also begun to offer their own fixed-premium service, usually for owners of smaller ships, reports AM Best in its just published analysis of the P&I market.
“Offering fixed-premium cover is just one example of the P&I Clubs diversifying into risks that cannot be pooled”, said AM Best. It noted that there were a range of business models within the 13 Group Clubs. “with some clubs like Gard P&I and The Swedish Club writing substantial Hull and Energy (H&E) books and others, such as West of England and japan Ship Owners’ Mutual P&I Association, taking a more cautious approach to diversification”.
AM Best noted that diversification could be beneficial to stability in the technical account. “In years when the P&I account performs poorly, good results from the H&E account can compensate, and vice versa”. The agency also observed that being able to offer a broader range of products could strengthen relations with brokers and clients, while warning that “expansion outside P&I business can put member capital at risk, if growth is not accompanied by a prudent approach to underwriting”.