Lockton, the world’s largest independent insurance broker, has released a report highlighting mounting financial pressures on the International Group of P&I Clubs despite modest premium increases. The report also highlights the crisis of suicides at sea.
The 2024/25 policy year saw the clubs report a collective underwriting loss of $312m, reversing two years of surpluses and resulting in a net underwriting loss of $98m over the past three years.
P&I claims hit a ten-year peak – with fires and electric vehicles emerging as new flashpoints for shipowners Net claims reached $3.1bn, up 25% year-on-year and 16% above the five-year average. Several clubs have pointed to the rising threat of fires as an increasing driver of major losses.
“This reflects both the risks of an ageing fleet and the growing prevalence of mis-declared or hazardous cargo, including electric vehicles,” Lockton stated in a release.
In addition, inflationary pressure on materials and labour, combined with greater damages arising from modern port upgrades, continues to drive up the cost of claims, Lockton pointed out.
War-related incidents, particularly in the Red Sea, rerouting via the Horn of Africa, sanctions and tariff-related costs all contributed to higher claims. Longer voyages not only raise costs but also expose vessels to new risks, including weather delays and mechanical breakdowns, Lockton explained.
In terms of crew claims, suicide remains the leading cause of death at sea, the report pointed out.
Pool claims make 2024/25 one of the worst years on record – and the true cost may be even higher. Historically, pool claims have shown substantial back-year deterioration, meaning today’s figures may understate the true cost. Assuming claims for 2024/25 deteriorate in line with historical trends, it will produce an overall total of approximately $775m. A lack of transparency around pool claims reporting only adds to uncertainty in the market.
Despite rate hikes, P&I premium income is “stuck in neutral”, Lockton said with churn and higher deductibles blunting gains. Despite an average 5.2% general increase, total premium income remained flat at $3.96bn, held back by churn – the replacing of older, higher-rated tonnage with new, lower-rated tonnage. Other potential factors include a growing willingness among members to trade rate rises for higher deductibles. This dynamic highlights the pressure on shipowners’ operating costs, as many seek to manage premiums by absorbing greater risk themselves. Lockton’s analysis shows churn has reduced rates by an average of 7.4% annually over the past decade, outpacing most general increases.
Clubs generated $711m in investment returns, offsetting some underwriting losses. With high interest rates in 2024/25, even conservative investment portfolios delivered meaningful gains. As central banks signal rate cuts through 2025, those exceptional returns may moderate, though the shift back into fixed income markets should provide a degree of stability.
Free reserves across the group rose 4.81% to $5.96bn, with some clubs returning capital to members at the 2025 renewal. While this underlines the sector’s resilience, reserves per tonne – used as a measure of a club’s exposure – remain below pre-2020 levels. At 2026 renewal, Lockton expects clubs will return capital to the membership once again, albeit to a lesser extent than in 2025.
Looking ahead, Lockton forecasts general increases of 5–10% for the 2026 renewal. The early view of the 2025 policy year is that claims are not as high as seen in 2024. However, clubs will strive to balance their underwriting and mitigate against continued inflation.
“This year has underlined just how fragile the balance is for P&I clubs. We’ve seen decade-high claims driven by fires and geopolitical shocks, while premium income has barely shifted. Investment returns have been a lifeline, but they can’t mask the structural pressures of rising costs and long-tail liabilities. As we look ahead to the 2026 renewal, shipowners should prepare for further rate increases – the real question is how clubs will balance the need for financial stability with the realities of a highly competitive market,” said Pippa Atkins, manager, Lockton P.L. Ferrari.
