MARKET TRENDS
The 2026/27 renewal season saw International Group clubs propose an average General Increase (GI) of 6% to offset ongoing inflationary pressure. Capital management became more conservative compared to the previous year, with just two of the 12 clubs – Britannia and Gard – returning capital to their members, half the number as at the 2025/26 renewal. At the Group level, reinsurance rates were secured as expiry – but this was not felt uniformly across classes. While passenger vessels saw a premium reduction, container vessels saw a rate hike, reflecting continued poor claims experience within the Pool, as well as the long-tail effects of the MV Dali container ship claim.
Since then, club performance has built on the strong foundation of 2025, in which Pool claims returned to a sustainable, normal level within club budgets. Yet, ongoing geopolitical tensions continue to drive market volatility, raising concerns about clubs’ reliance on investment returns. At the same time, financial agencies are placing greater scrutiny on underwriting results. With large increases expected at the upcoming group reinsurance renewals, clubs will have to strike a careful balance between GIs and capital returns at the 2027 renewal.
1. Combined ratios improve across the International Group
The average combined ratio reported by the Group for 2025/26 was 102.5%, down from 104.9% in the preceding year. This is a positive development, and brings the three-year rolling average down to 101.1%, just shy of a breakeven position. This translates into a relatively small three-year loss across the 12 clubs, and broadly reflects a more settled claims experience compared to the extreme volatility sustained back in 2024.
Notably, the range of combined ratios narrowed substantially in 2025/26, halving to 29.9 percentage points, compared to 68.5 percentage points in 2024/25. This reflects a more consistent experience across the Group. That said, there is still a significant delta between the year’s best and worst performers: Japan, which reported a combined ratio of 82.1% (some of which can be put down to the specific profile of the Club’s membership), and Steamship, which reported a combined ratio of 112%.
Club combined ratios (FY 2023–2025)
Excludes excess calls 3-year average for each club calculated by averaging the combined ratios for previous years, and does not represent a true average *Premium for 2023/24, 2024/25, and 2025/26 provided on a Group level
2. Net underwriting loss for the second year in a row
Underwriting results across the clubs improved in 2025/26. Despite this, the Group still reported a combined loss of USD 177m, resulting in an average deficit of USD 15m per club. This pushes the net underwriting loss over the last three years to USD 345m this year, up from USD 112m at the 2024/25 renewal. While significant, this jump is less a reflection of any major shift within the last 12 months, and more a signal of the benign nature of the 2022/23 year, along with the very high number of claims seen in 2024/25.
The best performing club was Skuld, which reported a surplus of USD 20m, with West and Japan the only others to report a surplus. But the latter was also one of four clubs whose underwriting position worsened in 2025/2026, along with Gard (USD -66m), Steamship (USD -56m), and London (USD -12m). Gard’s results are partially explained by the fact that, along with SOP and Swedish, the Club reports underwriting results on a calendar year basis. Consequently, Gard’s 2025 financial figures include the severe tail-end volatility of the 2024/25 winter claims period.
Underwriting results (FY 2023–2025, USD m)
3. Investment returns bolster performance yet again
Once again, clubs saw exceptionally strong investment returns in 2025/26, with an average return of 8%, or USD 95m. This marks the third consecutive year of impressive returns; across that period, Group-wide returns have totalled USD 2.63bn. Such impressive results have served to cushion the clubs against similarly long-running underwriting deficits. In 2025/26, such deficits were offset by investment returns six times over.
But as investment returns continue to strengthen, so the question grows as to how long favourable conditions might continue. With continued geopolitical uncertainty causing volatility in investment markets, it is unclear how long the clubs will be able to rely on investments to mask insufficient premium rates. Although it is still impossible to say how things will look at year end, anecdotal feedback from clubs midway through the 2026/27 policy year suggests that investment returns appear relatively modest. If this trend continues, this lack of a safety net may put more pressure on technical underwriting results.
Hefty investment returns undoubtedly provide security and bolster poor underwriting results. However, it is important to note that when assessing financial strength, rating agencies largely ignore the subsidising effect of investment returns, with S&P’s updated capital models placing unprecedented emphasis on underwriting returns. Clubs that consistently report combined ratios above 100% therefore face increasing pressure to correct their underwriting results before it impacts their rating. At the time of writing, the most recent rating updates have been positive, with West being upgraded to A- at the end of July 2026. Currently, eight of the 12 clubs are S&P ‘A’ rated.
Underwriting results vs investment returns (FY 2023–2025, USD m)
4. Diversified clubs outperform monoline on combined ratios
Diversified vs monoline combined ratios (FY 2023–2025)
There has been an increased focus on diversification in recent years, both in terms of the number of clubs actively seeking to diversify into other marine lines – most notably Hull and Machinery (H&M) – and in terms of the interest shipowners are showing towards diversified clubs. Several of the clubs now offer diversified product lines, and report a single combined ratio across all lines. These are Gard, NorthStandard, Skuld, Swedish, and West.
By increasing exposure to other marine market cycles, diversification acts as a counterweight to P&I market volatility (especially the Pool), thereby providing clubs with greater combined ratio stability. Across the last three years, the average combined ratio of the diversified clubs is 99.2% – three percentage points lower than their monoline peers (102.4%), and on the opposite side of the breakeven position.
Ideally, the mutual membership would receive a subsidy from the performance of any diversified venture. Of course, this is not guaranteed; were P&I and H&M market cycles to align in a bad year, it would further exacerbate a poor combined ratio.
5. Potential overspill call looms ahead of GXL renewals
In March 2024 the MV Dali container ship collided with Baltimore’s Francis Scott Key Bridge, causing the bridge to collapse, tragically killing six people, and significantly disrupting the Port of Baltimore. In 2026, the Group paid a settlement of USD 2.25bn to the State of Maryland, confirming this incident as the largest P&I claim in history (followed by Costa Concordia in 2012, estimated at USD 1.6bn).
With some litigation ongoing at the time of writing, the MV Dali could also become the first claim to reach the overspill reinsurance layer. The top layer of the Group reinsurance structure, the overspill provides USD 1bn of cover in the aggregate (subject to one reinstatement) excess of USD 2.35bn for the policy year in which the MV Dali claim occurred. For claims in excess of that USD 3.35bn in reinsurance, clubs can levy an overspill call on members for that year, or pay their share from their free reserves. A member’s overspill contribution would be capped at 2.5% of each vessel’s property damage limitation fund under the 1976 London Limitation Convention (LLMC). The tonnage-based limit is measured in SDR (Special Drawing Rights), which is subject to exchange rate fluctuation.
Given the size of the settlements, shipowners should expect further increases in Group Excess of Loss (GXL) reinsurance rates in 2027. Early indications suggest that prudent owners should budget for increases of 15–20%, albeit potentially with higher increases for container operators. It is also possible that claim collection complications may drive a shake up in the structure for the 2027 policy year.
Ultimately, the case of the MV Dali serves as a useful demonstration of the efficacy of the existing reinsurance structure, with a USD 2.85bn claim being settled with relatively little impact to the market. But it also offers a reminder that, while there is a tendency for the Group to appear self-contained, clubs are inevitably reliant on the commercial reinsurance market.
This has broader consequences. The fact remains that, without a consensus from participating reinsurers, it is not within the clubs’ gift to broaden cover to accommodate emerging risks, such as nuclear fuels. This means that the Group can be slow to react to technological advances in the shipping world – as demonstrated by its belated confirmation that autonomous vessels, including fully unmanned Maritime Autonomous Surface Ships (MASS), can access the P&I pooling system, subject to regulatory compliance and Club approval.
Reinsurance Rates (PY 2009–2026)
6. Geopolitical volatility remains a threat
Geopolitical turmoil has continued into the 2026, with direct consequences for the War Risk Insurance market. In the Gulf, tensions between Iran and the US provoked a 72-hour Notice of Cancellation for war risk coverage, on the clubs’ non-poolable programmes in early March, followed by reinstatements to include an exclusion for the Arabian Gulf. More recently, an uptick in activity in the Black Sea has pushed up war rates in the area. Notably, at the end of July the Joint War Committee (JWC) issued circular JWLA-034, expanding the high-risk zone in the Red Sea.
As these events evolve, they drive volatility within investment markets, and create significant operational challenges for shipowners. Generally, war insurers are only prepared to reconfirm rates 48 hours before a vessel enters a high-risk area, making it difficult for owners and charterers to evaluate cost in advance. By the time the area is reached, it is often too late, or too costly, to deviate. Adding further complication, the exclusions applied by the clubs’ reinsurers do not always match those set out by the JWC, and may be more limited – such as the list of areas that require a War Risks Buy-Back for Charterers Liability Insurance. While this means charterers are less likely to trigger extra premiums on their own policy, the high cost of the shipowners’ war buy-back remains a problem. This is because charterers typically rely on the shipowner to secure the coverage and pass the bill straight down to them, leaving them with virtually no control over the cost or negotiation.
Geopolitical unrest is also exacerbating the existing challenge of sanctions. Shipowners and insurers continue to grapple with disparate and often conflicting international regimes; a sanctions clearance in one jurisdiction does not necessarily apply in another. For instance, while a US-based operator might secure a license from the Office of Foreign Assets Control (OFAC) to interact with a sanctioned shadow fleet vessel, a London-based insurer could still be blocked from providing cover without a corresponding license from the UK’s Office of Financial Sanctions Implementation (OFSI). This regulatory friction adds complications to claims settlements – which involve a web of insurers, banks, and currency networks, each carrying its own unique risk appetite. While the industry has only experienced minor incidents involving shadow fleet vessels so far, a major maritime disaster under these conditions would likely have a devastating and unpredictable impact on both insureds and the wider insurance markets.
7. Average general increases of 5% expected in 2027
As stated above, Pool claims development appears stable, and within budget at the halfway mark of the current policy year. But it is still early days: the typically volatile northern hemisphere winter is still to come. This does also not factor in potential back-year deterioration. If investment markets remain flat, clubs could find themselves without the cushioning that they have grown accustomed to in recent years. Regardless, the need to sustain their S&P ratings will add pressure to correct underwriting results. With this in mind, we anticipate GIs to be 5% on average in 2027.
Yet, in the context of wider pressure on reinsurance rates (including the USD 1.5bn of deterioration on the MV Dali claim), another year of bumper investment returns, and improved underwriting performance in 2025/26, clubs must manage this situation carefully. To offset the impact of the anticipated GI, we expect to see some of the clubs returning capital to their members at the 2027 renewal.