West's renewal strategy was announced in Q3 2021 having been endorsed by its shipowner board. The Club has successfully executed that strategy at this renewal by rationalising its Membership through not offering renewal terms to those Members with consistently underperforming records and being selective in underwriting new business. Accordingly, by being deliberately leaner, the Club is now even better positioned to address the continued challenges over the coming years.
Although attritional claims remain stable, the magnitude of the largest claims in the industry which engage the IG Pool are persistently higher. The last two years have also seen the additional impact of claims related to the pandemic.
Investment markets are also challenging as inflation increases, with most Clubs’ investment strategies heavily weighted to bonds and therefore particularly impacted. As a consequence, Clubs will need to become far more reliant on underwriting performance.
The West has also been clear that tonnage within our industry as a whole has been underrated for several years. Whilst the market is hardening to account for this, change will be gradual and the market is likely to continue to endure adverse combined ratios for some time.
West’s clear and targeted renewal strategy was designed to address these challenges for the benefit of its Members.
Tom Bowsher, Group CEO of West, commented: “Significant increases in P&I liabilities over the past few years have been well publicised, with more high-value incidents and the more recent impact of Covid on our Members.”
Bowsher continued, “We recognise that this had been a difficult renewal for all and in a limited number of cases we sadly chose to relinquish what have often been long-term relationships with a number of shipowners. However, we are pleased to see that our Members share our view of the market, and have endorsed our strategy through their decision to continue to partner with the West, with the retention rate of those Members offered renewal terms at 98%.”
Simon Parrott, Underwriting Director at West, commented: “We have achieved our objectives at this renewal, both in terms of strategically revising our risk portfolio and seeking to achieve the necessary rate increases and term changes. Our underwriters have had some very difficult discussions, but we thank our Members for their understanding and continued support. We are well placed to take the Club forward with confidence into the future.”