At the end of last year independent broker JLT Re asked the 13 P&I Clubs what they thought the future was for the fixed premium P&I products offered by most, if not all, P&I clubs. Over the next two days IMN will summarize the replies of the respective clubs.
1) Joe Hughes, CEO of The American Club, said that the fixed premium products offered by many group clubs represented a legitimate extension of the clubs’ exceptional underwriting and service capabilities into areas of the shipping industry which do not either seek, or lend themselves to, insurance by way of traditional mutuality. So long as the demand for such insurance exists, there is no good reason why clubs, or any others for that matter, should not wish to respond to it.
2) Andrew Cutler, CEO at Britannia, said that Britannia expected clubs to maintain their fixed premium facilities, but did not expect to see significant growth in those facilities.
3) Bjornar Andresen, chief underwriting officer at Gard, said that, in Gard’s experience, offering fixed premium products was “a very effective way of providing insurance for risks that are not covered by the IG Agreement.”
He noted that Gard was one of the leading clubs in the provision of fixed P&I covers for operations that fall outside the pooling agreement. These insurances were offered to support members’ and clients’ operations, but they do not compete with the mutual products. “We believe that continuous work to improve mutual P&I cover is the best way forward, and that a supplement of fixed products is enhancing the strength of the IG pool, in terms of the ability to support members and protect the robustness of the pool”, he said.
Andresen said that the operations not currently covered by the IGA were benefiting from covers developed by us that were based on Gard’s experience and expertise, and were designed to enhance the competitiveness of the fixed P&I market. “On this basis, we believe that fixed premium products are here to stay”, he said.
4) Japan Club said that the continuing development of fixed premium facilities represented a threat to the mutual system, which was the underlying concept of P&I insurance. “The medium and long-term ramifications of further development of fixed premium facilities will need to be kept under review.”
5) Ian Gooch, CEO at London Steam-ship, said that a number of fixed premium offerings – charterers covers, for example – had been offered by clubs for some time. So, while it was a highly competitive market, “they’ve gained traction and look established”. However, Gooch said that there were more recent examples where it was too early to tell. “What these products highlight is the need for such diversification to be subject to effective monitoring and control, in order to avoid the risk of potential conflicts with the interests of traditional members”, said Gooch
6) Thya Kathiravel, Deputy Global Director (Underwriting) at North P&I said that North was one of the clubs that had diversified into the fixed premium sector for the benefit of mutual membership, and that the club was confident that fixed premium offerings had a part to play alongside the traditional mutual offering of the P&I clubs. “However, this should not detract from the very significant and important role of the traditional IG mutual platform. North is a strong supporter of the IG system and is of the firm belief that the fixed premium offerings of the clubs must not compete with the conventional IG model”, Kathiravel said.
IMN will report on the other seven P&I Club’s responses tomorrow.