Market Trends
It has been a challenging 12 months for the International Group of P&I clubs. This time in 2024, the market was impacted by high claims and high pool claims, with members closely watching for the impact of the Dali (Baltimore Bridge) allision claim on the reinsurance market. Fortunately, the market responded slightly better than feared – general increases for 2025 came in at an average of 5.2%, slightly below expectations. A similar pattern has played out on the Group Excess of Loss (GXL) programme, with a 10% overall increase at renewal.
But difficulties remain. This year has been marked by geopolitical uncertainty, with ongoing market volatility – albeit with some signs of stabilising at the mid-year stage. The early view of 2025 is that claims are lower than at the equivalent point in 2024, with eight pool claims at the time of writing, of which three related to a single incident. Large value claims are also down. It should be noted, however, that most claims are incurred during the last quarter of the year, meaning the picture could yet change.
1. Net underwriting loss across last three years
The 2024/25 year saw the International Group make underwriting losses amounting to US$315m on a financial year basis. This marks a significant shift from previous years, with surpluses of US$159m and US$56m in 2023/24 and 2022/23 respectively. The result is a net underwriting loss across the last three years of US$100m.
Underwriting results
Market total and average (2022-2025, US$ m)
Not all clubs fared badly, however, with more specialised clubs outperforming their larger counterparts. Japan was the best performing individual club, posting a surplus of US $43m, while Swedish and SOP also posted positive results. By contrast, NorthStandard’s loss of US $97m made it the worst performer over the financial year – indicative of the larger clubs’ greater exposure to pool and attritional claims. Others to post significant losses include Britannia (-US$86m), Skuld (-US$70m) and UK (-$US61m).
Notably, Gard proved to be an exception to the broader trend. Despite its size, the club posted a positive return of US$33m. However, it’s important to note that Gard provide their data on a group basis, including a very large non-P&I portfolio.
2. War and fires see net claims hit decade-high
Underpinning many of the clubs’ poor underwriting results is a high frequency and severity of claims. Total net claims across the International Group stood at US$3.18bn in 2024-25, marking the highest volume over the past decade. Claims were 23% higher in 2024/25 compared to 23/24 at the end of the policy year, and 25% above the 5-year average. Claims per gross tonnage also increased on previous years, hitting US$2.19 across the Group, up from US$1.87 in 2023-24. American, SOP, and Swedish were the only clubs to experience a decrease.
Net Claims
Policy year basis (US$ m, 2015-25)
Market total claims pre-2022 include North and Standard
With regards to claim type, the cost of lower-value attritional claims met expectations for most clubs. But this was offset by an increase in the magnitude of higher-value claims (within retention) and pool claims (US$10m–100m). At the higher end, several clubs have indicated the rising threat of fires as a driver of claims. According to Cefor data, four of the nine largest claims in 2024 stemmed from fire – a trend that is persisting into 2025. Older ships are particularly exposed to potential fires, underlying the dangers of an ageing fleet. However, a rise in mis-declared cargo, along with a potential increase in the transit of fire-prone electric vehicles, has brought greater risk overall.
But fire is not the only factor driving claims. Clubs continue to feel the impact of geopolitical volatility: there have been several substantial war losses, with the Red Sea continuing to be a hotspot. To avoid tensions, many fleets are opting to reroute cargo via the Horn of Africa, resulting in longer journeys, more delays, and greater potential for damage. Tariffs (especially for inbound-US cargo) and sanctions have brought further logistical costs, including unwanted goods, and higher claims values.
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. These phenomena are not new: much of the commentary over the last two decades has expressed similar concerns, reflective of a long-term upwards curve. As ever, the primary uncertainty is not about whether claims occur, but the random nature of on whom they fall.
In terms of crew claims, suicide remains the leading cause of death at sea. The clubs continue to focus on loss prevention activities, including initiatives to support crew mental health and wellbeing. To improve conditions onboard, many shipowners have invested in Wi-Fi and other technologies to connect the crew to their families, friends, and the outside world. This is commendable, but efforts have also proved to be a double-edged sword: by reducing socialisation among crew members, and giving them a more acute sense of what they miss when away from home. Online counselling services are increasingly being rolled out, and many clubs now have proactive mental health initiatives. The human cost is depressing, and introduces wider implications in the form of shipping accidents.
3. Pool claims see one of the worst years on record
Pool claims – defined as those between US$10m to US$100m – were high in 2024/25, exceeding all clubs’ expectations. More time is needed to see how these develop into 2025/26. However, early indications point towards a likely return to pre-pandemic claims costs, with steady increases driven by long-term inflation.
As ever, pool claims are subject to back-year deterioration, with the potential for costs to increase even after the end of the current policy year. Across the last ten years, such claims have historically deteriorated by 32% between 12–18-months, and 66% between 12–36-months. Assuming claims for 2024/25 deteriorate in line with these trends, it will produce an overall total of approximately US$775 m. If so, this will confirm 2024/25 year as one of the worst years on record. Any deterioration above what the clubs have reserved for will impact future financial years.
It is important to note that not all data is reported for the same time period: with clubs opting either for a Policy Year or Financial Year basis. The final quarter of the calendar year typically accounts for the highest proportion of claims, and subsequent deterioration. Results for clubs reporting on a Financial Year basis will therefore downplay the full impact of claims incurred by those clubs.
There is a further caveat to the pool claims data: the group seem to be less willing to inform their brokers and members about the magnitude and volume of pool claims. As mutuals, this practice impacts the whole market. While it is understandable that an individual pool claim and its value can’t be published, it is disappointing to observe that the general trend in the industry seems to be reverting to a lack of transparency.
4. Churn effect keeps premium returns flat
Across the clubs, premium income has remained largely flat in 2024-25, with a market total of US$4.15bn on a policy year basis – only marginally down from the prior year (US$4.16bn). Average premium per gross tonnage declined to US$2.94 in 2024-25, versus $US3.21 in 2023-24.
In part, this reflects the resumption of new ship deliveries following the pandemic-induced hiatus, dragging rates down through churn – the replacing of older, higher-rated tonnage with new, lower-rated tonnage. It remains to be seen whether this continues – early suggestions are that new build orders are down in 2025.
Lockton’s mutual P&I portfolio is equivalent to, or greater than, all but the three largest clubs. Our analysis of the churn effect is therefore based on a significant sample set, which can be reasonably regarded as a market average. Over the past decade – with yearly volatility depending on new building activity – our data shows a rate reduction range from 4% to 14% and an average per year over that period of 7.4%. In most years this would be greater than the clubs’ achieved general increases.
Other potential factors include a growing willingness among members to trade rate rises for higher deductibles. This is perhaps a reflection of the growing cost pressures on individual shipowners, prompting them to take their chances against the likelihood of a claim.
The decline in premium per gross tonnage also coincides with lower general increases from the clubs. Across the Group, the average general increase was 5.2% in 2024-25 – a decline from the previous year (6.5%), and the lowest figure since 2022. This was accompanied by a far greater range of increases (7.5%), reflective of a diverging approach among the clubs when it comes to increases.
Premium per GT
(Policy Year basis, US$)
*** excludes SOP due to focus on smaller tonnage
Lockton P&I churn rate per policy year
5. Combined ratios reveal majority of club deficits
The combined ratio is a key underwriting adequacy metric for the clubs, representing the sum of their loss ratio (claims and related losses) and expense ratio (operating costs) divided by earned premiums. A figure above 100% represents an underwriting deficit.
As shown below, 2024-25 was a poor year for many of the clubs, with an average loss of 104.9% across the International Group. This poor performance is driving overall losses across the last three years, a period in which clubs would typically expect to see exceptional years balanced out. Seven of the 12 clubs came in above the 100% breakeven figure across the three years, with Britannia (115.5%) followed by UK (109.0%) and American (105.0%). Japan (85.7%) was the best performing club across the period.
*3-year average for each club calculated by averaging the combined ratios for previous years, and does not represent a true average.
6. Investment returns key to offset losses
Investment returns across 2024-25 have been a critical offset to more modest underwriting results. The clubs saw a market total return of US$711m (including Gard as a group), along with an average investment return of US$59m, or 6% return. However, total market investment returns were 7% lower in 2024/25 than in 2023/24. Of the eight clubs to post underwriting losses, five recovered the deficit through investment returns – notably Skuld, Steamship, and UK.
Throughout 2024, elevated short-term interest rates across major central banks supported strong returns on cash holdings. For P&I clubs, which have traditionally adopted conservative investment postures, this environment provided a rare period in which liquidity and yield were not mutually exclusive. However, since rate cuts began to be signalled (and in some cases, enacted) in early 2025, many clubs have initiated rebalancing programmes, reallocating a portion of liquidity toward longer-duration credit and income-generating assets.
In part, this has involved a re-entry into fixed income markets. Given the long-tail nature of P&I claims, fixed income plays a critical role in insulating clubs’ reserve positions from duration mismatch and reserve inflation. The landscape has undergone a marked transformation since early 2024, as bond markets stabilised and rebounded, supported by softening inflation data. In parallel, several clubs have begun to incrementally increase their equity exposure, despite mixed equity market performances across 2024 and 2025. Group allocations likely remain structurally constrained, however – owing to regulatory capital considerations and internal volatility limits.
Overall results
Market total and average (2022-2025, US$ m)
*Overall results, Underwriting and Investment Return Combined
7. Improving capitalisation makes further returns likely
Across the International Group, total free reserves stood at US$5.88bn in 2024. This follows a year-on-year increase of 4.98%, broadly reflective of the successive investment returns across the Group. However, this should not be read without caution. Of the 12 clubs, just two saw an increase greater than in 2024: American and Japan. Another two of the clubs bucked the trend altogether, with Steamship (-1%) and Britannia (-2%) experiencing a decline in free reserves.
Free reserves per tonne – used as a measure of club’s exposure – also increased by US$0.07. While this is encouraging, the size of the increase remains small: at just a 1.76% on the prior year. On a per-tonnage basis, free reserves are still yet to reach pre-2020 levels. Regardless, the clubs are well-capitalised. At the 2025 renewal, 4 clubs provided a return of capital to the membership – amounts which are separate to the required premium increases. At 2026 renewal, we expect clubs will return capital to the membership once again, albeit to a lesser extent than in 2025.
Free Reserves
YoY change (%)
* pre-2022 figures include North and Standard in totals, average does not contemplate this ** 2022/23, 2023/24 and 2024/25 includes premium from all lines, shorter financial year 21 Feb 2022 - 31 Dec 2022
8. New details emerge in the case of the Dali
The incident in 2024 of the Dali cargo ship continues to hang over the P&I market. The ship collided with the Francis Scott Key Bridge in Baltimore on 26 March 2024, resulting in the bridge’s collapse. Details continue to emerge over the cause of the incident. As might be expected, there is significant legal action including (but not limited to): in June 2025, allegations from lawyers representing the state of Maryland; and in August 2025, the owner of the Dali, Grace Ocean Private Limited, and its manager, Synergy Marine Private Limited, suing the ship’s South Korean shipbuilder, Hyundai Heavy Industries.
Question marks remain over the total size of the loss, with final sums to be shaped by the outcome of the ongoing legal disputes. The high likelihood of appeals and counter actions means it is unlikely that these will be decided soon. But from a claims perspective, reserves were made in 2024, and subsequent premium increases applied by reinsurers. Without any deterioration, the result is not expected to have a massive impact going forward.
9. General increases of 5–10% expected in 2026
Due to the long-tail nature of P&I claims, and the fact that clubs announce their renewal requirements in the autumn of the current policy year, means that 2024/25 performance has an impact on 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. As such, while it is too early for specific indications, we estimate market-wide general increases in the range of 5–10%.
With regards to the reinsurance market, there is always significant volatility with regards to the claims that fall into the group reinsurance layers. As with general increases, it is too early to determine where this year will land. However, we do not expect a large increase in the costs of the programme. Estimated increases are in the range of 0–5%.
P&I General Increase History
(2021-2026, %)