Reinsurance rates for Protection and Indemnity (P&I) Clubs are expected to rise further heading into the 2027/28 renewals, with more focus on the fully cellular container (FCC) segment, according to Gallagher Specialty’s P&I Market – Midyear Review.
At the last renewal, the International Group (IG) increased the programme limits by USD250 million, meaning that, inclusive of the USD1 billion collective overspill protection, a claim of up to USD3.35 billion would be protected.
Market dynamics heading into autumn negotiations have experienced a change following the Dali casualty – the container ship MV Dali suffered a power outage and struck the Baltimore Bridge on March 26, 2024, causing it to collapse. It is considered the costliest marine liability claim in history.
Analysts said: “How will the renewal process in the autumn progress — would
the clubs look to increase the total limit still further? Is there any risk appetite from the reinsurance market to accommodate this, considering the Dali loss to the higher layers — and if so, at what price?
“The prospect of a loss to these higher layers is no longer theoretical but is a reality, and so the basis for pricing has a benchmark instead of being more driven by the cost of capacity. It will be a very interesting process and the challenging one for the IG Reinsurance Committee.”
In light of these headwinds, Gallagher projects a general increase (GI) range of 2.5% to 5%, alongside growing pressure on Clubs to deliver commercial-level capital returns as part of the renewal discussions.
All International Group clubs have now announced their results for the 2025-26 cycle, revealing a market sustained by robust investments despite ongoing technical deficits.
The sector reached a market-wide loss of USD250 million with an average market financial year combined ratio of between 105 and 108%. This marks a 28% improvement over the prior year’s USD352 million deficit and 110% combined ratio.
Offsetting the underwriting shortfall, strong investment yield for the year gave a gain of some USD1,125 million with a typical yield of between 7 and 9%.
Free reserves rose to some USD6.8 billion, an increase of USD850 million, further supported by a USD31 million boost from the UK Club’s group restructuring.
Meanwhile, Pool retained losses for 2025-26 were a shade over USD300 million, below the recent eight-year average, but it is to be expected that this figure may increase during the coming 12 months.
Gross premium income climbed by just over 5%, partly driven by commercial diversification and new non-P&I risks, such as those underwritten by Gard.
Analysts concluded: “Free reserves are at an all-time high close to USD6.8 billion. The market will be under more pressure to return excess reserves to the membership in the form of capital or premium returns. A potential overspill could be absorbed by the IG Clubs proportionately, but with some Clubs being more able to perform than others. Competition for new tonnage is also at an all-time high, despite underlying pressure to improve technical underwriting.”
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