High claims may push up marine insurance rates

MUMBAI: Steep rise in claims and turmoil in financial markets are expected to push up marine insurance rates by 20% by the year-end, thus hitting shipping companies hard.

According to industry officials, the Protection & Indemnity (P&I) clubs are considering the option of increasing their members��� contribution. There are as many as 13 such clubs which are portfolio investors having exposure in equity and debt. P&I insurers are not-for-profit bodies owned by the maritime companies.

���It is hard to believe that there is any international group club which has not been affected by the current financial crisis,��� said American Club chairman & CEO Joseph EM Hughes. ���Some clubs have already announced their general increase requirements which are all in double digits,��� he added.

The Indian shipping companies usually tap the international insurers market for their protection and indemnity cover. The protection and indemnity (P&I) covers risks of cargo liability, oil pollution, loss and damage due to collision, employee-related claims, damage to fixed and floating objects during operations or transit. These by nature are third-party related claims.

An shipping official said some P&I Clubs like Steamship Mutual, Britannia, UK P&I Club, North of England have already asked for a hike of around 13-16% in renewal premiums. ���It is inevitable that most of these clubs will need to seek more than token increases for 2009,��� Mr Hughes said. Nevertheless, some clubs may not increase the rates by as high as 20%, he said.