Liga Asuransi – Hello, we’re back on our trusted information channel, discussing various risk and insurance solutions for the maritime world. For ship owners, the current situation demonstrates that operational risks cannot be underestimated. Insurance claimsProtection and IndemnityThe increasing importance of (P&I) underscores the importance of understanding and managing maritime risks, from ship accidents and cargo damage to environmental liability.
In 2024–2025, the Protection and Indemnity (P&I) insurance sector experienced a significant increase in claims. This was driven by several major incidents, including shipwrecks and damage to maritime infrastructure. For example, the collapse of the Francis Scott Key Bridge in Baltimore, caused by the cargo ship Dali, is expected to result in claims of up to $4 billion, making it one of the largest claims in maritime insurance history.
In response to this increase in claims, most P&I Clubs have implemented premium rate increases of between 4% and 7.5% by 2025. These increases aim to maintain premium adequacy and maintain the financial stability of these clubs.
Despite the increase in claims, the P&I sector continues to demonstrate financial resilience. P&I clubs’ free reserves reached a record high in 2023/2024, driven by strong investment returns. However, the surge in large claims is expected to impact their technical performance in 2024/2025.
Against this backdrop, it’s crucial for shipping companies and shipowners to understand the dynamics of the P&I market and ensure they have adequate coverage. Consult a professional insurance broker to tailor a policy to your specific risk profile.
Factors Causing Increase in P&I Claims
Increased claims in the sectorProtection and Indemnity insurance(P&I) during the last year period was influenced by several main factors:
- Surge in Shipping Activity and Maritime Trade Volume
Increased global shipping activity increases the risk of accidents and other incidents. The high volume of maritime trade increases the likelihood of maritime incidents. - Ship Accidents Due to Human Error or Extreme Weather
Human error and unpredictable weather conditions are major contributing factors to maritime incidents. For example, the collapse of the Francis Scott Key Bridge in Baltimore, caused by the cargo ship Dali, is estimated to result in claims of up to $4 billion, making it one of the largest claims in maritime insurance history. - Environmental Damage and Legal Liability
Oil spills and other pollution add to the claims burden for P&I clubs. Incidents such as oil spills or other pollution can cause significant environmental damage, increasing the number of claims filed. - Increasingly Strict Regulatory Requirements
Stricter international regulations increase compliance costs and legal risks for shipowners. Andals must ensure they comply with all applicable regulations to reduce the risk of claims.
In response to this increase in claims, most P&I clubs have introduced premium rate increases of between 4% and 7.5% by 2025. These increases aim to maintain premium adequacy and maintain the financial stability of these clubs.
Risk Mitigation Strategies for Shipowners
Facing increasing claims in the P&I insurance sector, shipowners need to take strategic steps to protect assets and ensure operational continuity. Here are some mitigation strategies that can be implemented:
a. Improving Operational Standards and Crew Training
Human error remains a dominant factor in maritime incidents. Investing in regular training and improving ship operational standards can reduce the risk of accidents. It is recommended that you implement strict standard operating procedures (SOPs) and ensure that the crew has the appropriate certifications.
b. Routine Maintenance and Inspection
Poor ship technical condition can lead to damage and accidents. Performing routine maintenance and inspections according to a set schedule can prevent undetected damage. Andal must ensure that all ship equipment and systems are functioning properly and meet international safety standards.
c. Implementation of Technology and Monitoring Systems
Adopting the latest technology, such as real-time ship condition monitoring systems, can help detect potential problems before they escalate into major incidents. This technology allows you to monitor engine performance, weather conditions, and other environmental factors that could impact ship safety.
d. Proper Risk Diversification and Insurance
In addition to P&I insurance, you are advised to consider additional insurance such as hull and machinery (H&M) insurance and environmental risk insurance. This diversification helps ensure that all aspects of risk are adequately covered.
e. Consultation with a Professional Insurance Broker
Working with an experienced insurance broker who understands the maritime industry is crucial. Brokers can assist in selecting the appropriate policy, tailoring premiums to your risk profile, and providing advice on the claims process. They can also assist in negotiating with P&I clubs to obtain more favorable terms.
By implementing a comprehensive risk mitigation strategy, you can reduce potential losses and ensure safer and more efficient operations.
The Role of P&I Insurance in Risk Mitigation
While preventive measures such as strict SOPs, crew training, and monitoring technology are crucial, maritime risks remain due to external factors such as extreme weather, third-party errors, or unforeseen accidents. This is where the role ofasuransi Protection and Indemnity (P&I)become very vital.
P&I insurance is designed to protect you as a shipowner from third-party claims, including financial losses resulting from crew injuries, cargo damage, pollution, and third-party property damage. Without this protection, a single major incident could result in billions of rupiah in losses, potentially destabilizing a company’s financial stability.
In addition to providing financial protection, P&I also helps you manage often complex and lengthy legal claims. The right P&I policy provides access to a professional legal team to handle claims, allowing you, as a shipowner, to focus on day-to-day operations and risk management without the burden of urgent legal matters.
It is important to note thatchoosing the right P&I policy is not a simple matter. Each vessel, shipping route, cargo type, and operation has a different risk profile. This is where the role ofinsurance brokerbecomes crucial. Experienced brokers can conduct a thorough risk analysis, recommend the most appropriate policy, and ensure the coverage covers the greatest potential losses. They can also guide shipowners through the claims process, ensuring claims are resolved efficiently without disrupting business continuity.
Additionally, a broker can help you understand the terms and conditions of your P&I policy, including exclusions, liability limits, and vessel maintenance obligations. A thorough understanding of the policy prevents misunderstandings that could lead to denied claims or legal disputes.
Thus, P&I insurance is not only financial protection, but also a strategic risk management tool.A combination of preventive measures, internal risk management, and P&I insurance protection helps shipowners maintain the continuity of their business, reputation, and assets, while remaining compliant with evolving international regulations.
Practical Tips
Facing a significant increase in P&I claims, as shipowners, you need to take practical steps to minimize risk while ensuring optimal insurance coverage. Here are some tips you can apply:
a. Periodic Risk Profile Evaluation
You should conduct regular risk assessments, including operational risks, weather, cargo conditions, and potential third-party disruptions. With a thorough understanding of your risk profile, you can also adjust operational policies and insurance policies as needed.
b. Integrate Preventive Steps with Insurance
Preventive measures such as strict SOPs, crew training, routine maintenance, and the use of monitoring technology should be combined with insurance coverage. This approach ensures that while risks cannot be completely eliminated, the financial and operational impacts can be minimized.
c. Choose the Right P&I Policy
Each vessel carries different risks depending on the type of vessel, shipping route, and cargo. Selecting the right policy is crucial to ensure coverage for all potential claims. Ensure the policy covers liability for crew, cargo, third parties, and environmental risks.
d. Take Advantage of a Professional Insurance Broker
Insurance brokers play a crucial role in tailoring policies to a vessel’s specific needs. They can assist with risk analysis, recommend coverage amounts, and streamline the claims process. Working with a broker ensures shipowners receive maximum protection and avoids the risk of underinsurance or denied claims.
e. Monitor Current Claims and Regulatory Trends
It’s recommended that you stay up-to-date on the latest maritime claims trends and international regulatory changes. This allows companies to adapt risk mitigation strategies, update operational procedures, and ensure insurance policies remain relevant.
f. PlanContingencies for Major Incidents
Developing a contingency plan for major incidents such as shipwrecks, oil spills, or cargo damage is crucial. With thorough contingency planning, shipowners can respond quickly, minimize losses, and ensure crew safety and operational continuity.
By implementing these practical tips, you’ll not only improve operational safety but also maximize the benefits of P&I insurance. The integration of risk mitigation, technology, internal procedures, and insurance coverage creates a comprehensive and effective risk management strategy.
Conclusion: It’s Time to Understand the Importance of P&I Insurance
Facing a significant increase in P&I claims, shipowners are faced with the reality that maritime risks cannot be ignored. Every incident, from shipwrecks and cargo damage to environmental liability, has the potential to cause significant financial losses and disrupt operational continuity.
In fact, with the increase in claims, this is the perfect time for shipowners to realize the importance of P&I insurance. This protection not only helps cover financial risks but also provides peace of mind, professional legal support, and a risk mitigation strategy integrated into your ship’s operations.
📌 It’s important to remember that choosing the right P&I policy isn’t something you can do alone. Working with a professional insurance broker allows you to obtain a thorough risk analysis, tailor your coverage to your needs, and ensure an efficient claims process.
📞 Contact the L&G Insurance Brokers team via WhatsApp at0811-850-7773for a free consultation. Find the right P&I insurance coverage for your vessel and protect your assets, crew, and business from evolving maritime risks. Don’t wait until a major claim occurs to realize the importance of this coverage!
