In its 2017 report on the P&I Clubs, broker Jardine Lloyd Thompson asked all of the clubs a list of questions. Here are the responses of Swedish Club, UK P&I Club and West of England Club to one of those questions. Over coming days IMN will be printing the responses of P&I Clubs to other questions.
Q: Do you consider the mutual P&I system has seen off the threat to its mainstream business that some thought might be presented by the growth of fixed premium P&I insurance capacity in recent years?
Swedish Club said that the mutual P&I system was constantly subject to competition from fixed premium P&I insurance capacity, especially within certain segments. It said that the challenge for fixed premiums was to build up volume and relationships, and to obtain premium adequacy for an inherently volatile insurance performance.
UK P&I Club
UK P&I Club said that, yes, it thought that the mutual sector had done so, but warned that the threat would return if the Group was too slow to react to changes in the industry. “The IG clubs must strive to understand how members’ businesses are evolving and ensure that the Group structure and scope of cover similarly evolves to match the members’ needs”, UK Club said.
West of England
West of England Club said that it would not necessarily characterize it as the mutual system having “seen off” the fixed premium providers, but rather that market mechanisms and the overwhelmingly positive benefits of the IG system had resulted in a degree of market equilibrium, with fixed premium providers tending more towards the lower end of the vessel size range.
The Club said that it welcomed the fact that a vibrant market existed for P&I insurance but said that West of England continued strongly to believe that the mutual system remained the most cost-effective and wide-ranging product of choice for many shipowners and operators. The Club said that it would not in any event wish to openly compete against fixed premium providers at prevailing market rates, because excess capacity in the sector had driven premium down to levels which the Club saw as being neither appropriate nor sustainable.