P&I Club West of England is to ask members for a constitutional amendment that will enable it to move into the hull and machinery space, according to an announcement on its website. The three-paragraph statement added that no further comment will be forthcoming at this stage, promising simply that details of any new product launch will be published in due course. Hull cover has traditionally been dominated by Lloyd’s syndicates, but they have been overtaken by the Nordic, Singapore, and Chinese markets over the past few years.
Several P&I clubs, led by Scandinavian affiliates of the IG, already write hull books on a commercial basis, using any profits to subsidize liability and legal insurance provided on a not-for-profit mutual basis. Leading the pack is Gard, the biggest club in the IG, which is already the world’s largest single hull insurance entity. In 2015, the American Club took over the old Hellenic Hull Mutual Association to launch American Hellenic Hull Insurance on a for-profit footing. In Britain, North Group, set to merge with Standard next February, entered the Bluewater H&M niche in 2020, expanding on an existing base in fishing vessels and small craft offered by its Sunderland Marine subsidiary.
Proponents of such diversification also make the point that commercial hull underwriting helps P&I clubs even out the inevitable volatility in their core business. West said in its statement, published under the name of its chief executive Tom Bowsher, that it is committed to supporting its members and others in the maritime community by providing a broad spread of insurance products and services. “As part of that process the club continually evaluates new opportunities which could add value without unnecessarily exposing our members’ capital. Consideration is currently being given to a potential hull and machinery venture. “As a prudent step in that evaluation, permission is being sought from the club’s membership and our regulator to expand the classes of insurance business which the club may potentially underwrite.” The club has already diversified to some degree, through joint ventures such as legal consultancy Qwest and cyber security provider Astaara.
West’s push into H&M may well have one eye on shoring up its balance sheet, following last week’s decision by rations agency Standard & Poor’s to downgrade its Insurer Financial Strength Rating from A- to BBB+, considering a recent fall in investment returns. But more positively, the club has recently returned to better-than-breakeven underwriting performance, recently unveiling a 97.9% all-business combined ratio at the halfway stage. Attention will now be fixed on its pricing strategy for the 2023 renewal round, which is likely to be unveiled shortly.
The only club to declare so far has been Steamship Mutual, which on Wednesday confirmed its intention to seek a 7.5% general increase. In a recent interview with Lloyd’s List, Mr Bowsher has hinted that an increase could also be on the cards for West.