P&I clubs face offset of gains by rising pool claims

AM Best also expects further rate adjustments in upcoming renewals.

An increase in pool claims for the 2024/25 period is expected to partially offset high investment returns for Protection and Indemnity (P&I) clubs, according to a new report from AM Best.  

The report, P&I Clubs: Record High Free Reserves Despite Challenges on Technical Performance, highlights that record-high free reserves in 2023/24 were driven by strong investment returns, which are expected to remain substantial in 2024/25. 

However, the rise in pool claims is likely to weaken overall technical performance.

AM Best also expects further rate adjustments in upcoming renewals to maintain underwriting discipline. 

The continuation of general increases is considered necessary to ensure price adequacy, given the anticipated deterioration in underwriting results due to a rise in the frequency and severity of large claims.