UK P&I Club posts 116% CR following costly pool year in 2024

By Rebecca Delaney

May 29 - (The Insurer) - The UK P&I Club has posted an underwriting result of 116% for the 2024 financial year, citing "one of the most expensive pool years on record" as the driver of the deficit, as well as an unusually high level of large retained claims.

Following a members' committee meeting, on Thursday the UK P&I Club said it aims to maintain breakeven underwriting over the medium term by charging "sufficient" premium to cover claims and expenses incurred.

"Since 2021 pricing has steadily recovered following the previous soft market cycle and at the 2025 renewal the Club has achieved a further rate increase in line with its financial forecast," said the statement.

"The combined ratio of 116% reported this year is higher than the Club’s financial forecast, driven by one of the worst years across the market for large losses."

It added that high profile incidents, such as the Dali collision in Baltimore in March 2024, combined with several large claims notified in the final quarter of the year led to "what may well become the most expensive pool year on record".

While the overall frequency of claims is decreasing, P&I claims are becoming more expensive and complex, driven by the evolving risk and regulatory environment.

Large claims experienced during the 2024 financial year were diverse across ship types and trades, with the committee meeting particularly focused on lessons learned from failures in navigation, the increasing cost of and challenges associated with cargo fires on container ships, the U.S. litigation landscape, and the impact of social inflation driving large loss severity, particularly for wreck removal.

On a more positive note, following several years of remediation, the fixed premium P&I and charterers’ portfolios performed positively, with combined ratios of 93% and 83% respectively.

The overall result benefitted from a surplus of approximately $10 million from the non-mutual lines of business.

Overall free reserves increased to $494 million in the 2024 financial year, which the Club said was driven by an investment return of 6.6%.

The solvency ratio stands at 242%, which was described as "well in excess" of the Club's solvency and rating agency risk appetite.

The UK P&I Club concluded that it continues to refine its risk appetite and take appropriate action to improve the overall portfolio composition of mutual and fixed premium business entered.