Fires, geopolitical tensions are driving up the costs of mutual ins. coverage for the maritime industry. The International Group ofProtection and Indemnity (P&I) Clubs — which covers liability for 90% of global tonnage — reported an underwriting loss of USD 312 mn in 2024-2025, according to major independent maritime ins. broker Lockton’s Market Trends report. More frequent fires aboard ships, war losses on the back of turmoil in the Red Sea, rerouting ships via the Horn of Africa, and higher tariffs were cited as main drivers for greater exposure to damage and delays.

But first, what is P&I ins. ? P&I coverage is a form of mutual maritime ins. for third-party liabilities for ship owners and operators. Unlike traditional ins. that covers physical damage to ships and cargo, P&I covers loss of life, crew injury, pollution damage, collision accidents, as well as dock damage. Usually, P&I is covered by mutual associations called P&I clubs, which pool resources from membership to cover claims.

Claims reach a decade-long peak: The FY 2024-2025 saw a high net claim frequency and severity, hitting USD 3.1 bn — the highest it’s been in a decade, the report found. Although attritional claims — smaller, routine claims — met expectations, higher-value and pool claims — large claims that are shared by club members — increased significantly, outpacing paid premiums.

The losses effectively erased modest gains made in the previous two years, leaving the group’s net underwriting down around USD 98 mn.

But investments were a life-saver: Investment returns were a significant contributor to offsetting losses, helping to balance out less favorable underwriting outcomes. Collectively, the clubs achieved a market total return of USD 710 mn, with an average investment return of USD 59 mn, representing a 6% gain.

Premiums remain flat: Despite clubs pushing for higher rates, income from premiums was relatively flat, driven largely by new ships entering service after the pandemic hiatus — otherwise known as the “churn effect.” The average premium collected per gross ton of shipping was USD 2.87 in 2024-25, a decline from the previous year’s USD 3.14.

SOUND SMART- The churn effect entails firms replacing aged vessels — which incur higher premiums — with newbuilds to secure lower premiums per gross tonnage.

Future outlook: A preliminary analysis of 2025 indicates that claims will be less intense than 2024’s record level, the report said. Lockton estimates market-wide general increases in the range of 5-10%, while predicting a 0-5% increase in re-ins. costs for 2026.

About Lockton: Founded in 1966, Lockton is one of the largest ins. brokerages, active in more than 140 locations, employing 13.1k ins. and risk specialists, and serving more than 65k clients, according to its website.

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