The joint reinsurance program of the P&I Clubs for 2025/26 has been signed and sealed. The premium is significantly higher than in the current year.
As feared, the reinsurance costs for ship liability (P&I) will rise significantly next year. Owners of container ships will have to shoulder a large proportion of these costs, according to a statement from the International Group of P&I Clubs – the umbrella organisation of the twelve major mutual ship liability insurers.
Although the Group has been able to extend its reinsurance program up to a loss limit of US$3.1bn largely unchanged in structure, it must pay the insurer consortium led by AXA XL a higher premium than in the current year. The cost increases are allocated to the various ship classes according to risk weighting.
At +23.6%, the corresponding surcharge (reinsurance rate) on the net P&I premium for no other ship type will be increased as much as for container ships. Their corresponding rate increases to 89.03 US cents per GT.
For all other tonnage categories, the surcharges will only be increased by single-digit percentages: +1.5% for crude oil tankers, +8.9% for clean tankers, +3.3% for dry cargo ships, +1.6% for passenger ships, +3.8% for chartered tankers, +3.3% for chartered bulkers.
The sharp increase in rates for container ships comes as no surprise following the collision of the container ship “Dali” with the Francis Scott Key Bridge in Baltimore and the weeks-long blockade of the port in the spring. For the shipping industry, it could be the largest liability claim in history. Processing and settlement are likely to take several years due to the complexity and large number of parties involved.
In addition to the accident in Baltimore, there has also been an increase in other major P&I claims in the year to date, some of which have passed through to the reinsurers. Against this background, the renewal of the program was particularly challenging, explained Mike Hall, Chairman of the Reinsurance Committee of the International Group. In the previous year, the association had been able to obtain concessions from reinsurers.
For container ships, where the reinsurance share of the P&I costs can amount to a quarter or more, the price increase has a correspondingly massive impact.
The reinsurance price increase will be charged in addition to the general P&I premium increase in a range of +4% to 7.5% for 2025/26. The deadline for renewal is 20 February.
The P&I Clubs have been able to procure increased cover from reinsurers for “Excess War P&I” in the Black Sea. Due to the war, the region is largely considered an exclusion zone. In future, losses of up to US$100m will be covered above the war insurers’ liability instead of the previous US$80m. (mph)
