By Richard Adler.  

This year´s P&I renewal was always going to be challenging: the Clubs trumpeted the need for sharp rises as well as their concern about record-high pool claims months before their board meetings in autumn, XS loss reinsurance increases were ducked the previous year and therefore came down hard on shipowners in December and last but not least the S&P Rating Agency’s sword of Damocles hovered above the heads of the Clubs ready to strike and to downgrade their rating.

So it came at no surprise that renewal negotiations turned out to be forcefully difficult. Many shipowners with clean records remained adamant about not accepting the proposed rises whilst Clubs pushed upwards across the board. At the same time – and our competitors often fail to report this – a fair number of shipowners were also quick to support their Clubs by accepting increases well in excess of what should have been technical adequate renewal terms.

Understandably, stronger performing shipping segments – like Container vessel and Bulker owners – were more sympathetic whereas particularly owners of the depressed tanker market expressed genuine concern about the rate corrections in the P&I market.

On the chartered side most Clubs pretended to land as close as possible to their declared general increase but quickly faced fierce resistance by Charterers which frequently left Clubs no choice but to row back and agree to far lower rises. In the instances where Clubs were not prepared to do so accounts simply and swiftly moved to other Clubs.

For most shipowers and charterers it was the most challenging P&I renewal negotiation in years but as we anticipated in the run-up before the renewal season the underlying P&I market fundamentals left the Clubs little choice and going forward the more disciplined Clubs should be back on track and on a good path to overcome their underwriting deficits. With a bit of luck fewer and less costly claims will occur in 2022, and as such the P&I market stands a chance to stabilize in the next couple of years. Global economy woes, the pandemic and geopolitical concerns and its impacts on the shipping industry give shipowners enough to worry about!