Norwegian marine insurer Gard highlights the high quality of its customers as the reason why the company won’t raise its insurance premiums to the same degree as other P&I clubs.

The insurer has informed its members of a premium increase of 5-7 percent for the insurance year 2023/’24.

“The reason why our increase is somewhat lower than our competitors are probably due to that we have customers with good standards and high operational quality. This means that we can be competitive and operate with somewhat lower premiums than several others,” Gard’s Chief Underwriting Officer, Bjørnar Andresen, says to ShippingWatch.

He adds that it’s nothing new that Gard’s premium increase is lower compared to competitors, and that the company “for a number of years [has] delivered very competitive results.”

Others are asking for twice as much

Gard is part of the International Group of P&I Clubs together with 12 other members, and with the 5-7-percent increase, Gard’s is in the lower range compared to other increase announcements for the next insurance year.

Out of the thirteen members, seven clubs have asked for a 10-percent increase, including Skuld, West of England, UK P&I and The Standard Club.

The American Club is not implementing a general increase, but is increasing the pricing risk by a minimum of 10 percent across all rates.

Swedish Club has yet to announce its renewal policy, Steamship asks for 7.5 percent, while Britannia P&I, The London P&I Club and Shipowners’ Club will do no general increase but rather individual assessments of its members and their portfolios.

Preparing for inflation

A recurring theme in several of the circulars that P&I clubs have sent out to their members is that even though the claims situation has been better this policy year, clubs still have to prepare for the effects of the global inflation.

For instance, Norwegian Skuld points to a gradual improvement in the mutual product, and that achieving rate adequacy has been a focus for the last two years, but that there is still some way to go. In addition, the marine insurer highlights the inflation.

“There are early signs that claims costs are increasing due to inflation, but the full effect of the global impact of inflation is yet to be realised, although it will have a negative financial impact in the short to medium term,” reads Skuld’s circular.

The increase of claims costs due to inflation is also referred to by the board of The Standard Club as one of the reasons behind the general 10-percent increase.

West of England states that even though the financial performance has been improved and that successful actions have been made since the last renewal, this has not been enough.

“The board recognizes that premium remains insufficient to meet current and expected future claims costs, especially having in mind the potential impacts of high global inflation,” according to the circular.

The American Club also states that negative developments in policy years 2020 and 2021 have been turned around in the current policy year and that the launched measures have worked, but increases on premium prices are still needed and especially due to the “persistent levels of monetary inflation around the globe.”

Last increase

Whereas double-digit premium hikes seem to be the trend for next policy year, last year’s increases were a more mixed bag.

Skuld announced an increase of at least 10 percent last year, too, after having abandoned general increases.

“Although Skuld has long abandoned a policy of general increase, Skuld sees the need to make a market rate adjustment of 10% in mutual P&I rates, for the policy year 2022/23,” Skuld CEO Ståle Hansen said to ShippingWatch at the time.

West of England made a standard surcharge in 2021 of 15 percent across all mutual premium rates, The American Club increased premiums across all classes by a minimum of 12.5 percent, whereas The Standard Club decided on a 7.5-percent increase.

Gard applied no general increase for the policy year 2022.

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