OLDWICK, N.J.--(BUSINESS WIRE)--In this A.M.BestTV episode Filippo Novella, financial analyst, A.M. Best, said protection and indemnity (P&I) clubs have seen good underwriting profitability, but face market and economic pressures. Click on http://www.ambest.com/v.asp?v=pandiclubs418 to view the entire program.
The balance sheets of P&I clubs have remained strong; however, pricing has been under pressure during the recent renewal season.
“Free reserves, which represent the P&I clubs' return earnings, have been bolstered by several years of very good underwriting profitability,” said Novella. “Currently, there is a benign claims environment, with relatively few numbers of large losses. Additionally, the P&I clubs are starting to refocus more on underwriting performance by means of introducing new and increasing current levels of deductibles, as well as increasing rates for poorly performing members.”
Novella also spoke about some of the challenges facing the sector.
“There is negative pressure on the premium rates for the P&I market, which is coming from two different sources. First, members are still facing challenging economic conditions since the 2008 financial crisis, and second, increasing competition is coming from commercial insurers. These two factors are driving negative pressure.”
He also stated that, “clubs do operate in a low interest rate environment, which represents a restraint on their overall profitability.”
To access a copy of this special report, titled, “Balance Sheets of P&I Clubs Strong But Pricing Under Pressure Amid Strong Competition,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=270550.
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