The current low cost of marine reinsurance, due to the softening of global reinsurance rates, is now resulting in direct savings for shipowners as protection and indemnity clubs pass on the benefits.
The main shipping insurance renewals are just weeks away, when the P&I clubs tend to close the majority of their shipping insurance contracts, but the market is already reporting pressure on these rates, as reinsurance savings are being handed down.
Sources said that this is partly due to brokers playing hardball, demanding savings for clients or stating they will take their business elsewhere.
But the P&I clubs have some leeway to offer better terms this year, as the savings they have made on their marine reinsurance programs are of sufficient size that they can be passed down directly to shipping companies.
Tradewinds News recently reported that UK P&I clubs had saved around $100 million on their reinsurance costs over recent renewals and now with rates still under pressure in the specialty markets, the decline in reinsurance prices is being passed on.
Specialty lines such as marine reinsurance have come under increasing pressure as reinsurers have looked outside of catastrophe lines for other sources of return. Hence the market has continued to face pressure, even while property catastrophe rates have been reported to be stabilising somewhat, resulting in cheaper marine insurance becoming more widely available.
