The West of England P&I Club has released details of the targeted strategy it used at renewals to counter the challenges posed by what it sees as consistent underrating in the P&I market and the growth of unpredictable major claims.
With these difficulties compounded by a weak investment market, the Club decided not to offer renewal terms to those Members with consistently underperforming records, while also being selective in underwriting new business.
Accordingly, by being deliberately leaner, the Club says it is now even better positioned to address the continued challenges over the coming years.
Although attritional claims remain stable, the magnitude of the largest claims in the industry which engage the IG Pool are persistently higher, and the last two years have also seen the additional impact of claims related to the pandemic.
Investment markets are also challenging as inflation increases, with most Clubs’ investment strategies heavily weighted to bonds and therefore particularly impacted. As a consequence, Clubs will need to become far more reliant on underwriting performance.
The West has also been clear that tonnage within its industry as a whole has been underrated for several years, and while the market is beginning to harden, adverse combined ratios are still predicted for some time.
“Significant increases in P&I liabilities over the past few years have been well publicised, with more high-value incidents and the more recent impact of Covid on our Members,” said Tom Bowsher, Group CEO of West.
“We recognise that this had been a difficult renewal for all and in a limited number of cases we sadly chose to relinquish what have often been long-term relationships with a number of shipowners,” Bowsher continued.
“However, we are pleased to see that our Members share our view of the market, and have endorsed our strategy through their decision to continue to partner with the West, with the retention rate of those Members offered renewal terms at 98%.”
Simon Parrott, Underwriting Director at West, also commented: “We have achieved our objectives at this renewal, both in terms of strategically revising our risk portfolio and seeking to achieve the necessary rate increases and term changes. Our underwriters have had some very difficult discussions, but we thank our Members for their understanding and continued support. We are well placed to take the Club forward with confidence into the future.”
