A stable claims year – during a period of volatility

Net incurred claims increased only very marginally (0.3%) across the P&I market. Gross and net paid claims increased by inflationary levels, 2.1% and 3.8% respectively.

Contrasting with the marginal claims increases, premium charged by the combined market reduced by 5.9%. This headline figure is however somewhat misleading on its own, as six IG clubs made some form of premium rebate in 2016/17. The underlying premium, excluding these mid-year premium rebates, would have been a 1.6% reduction.

The graph below displays the progression of gross paid claims, net paid and net incurred claims compared to total premium paid into the market, over the last 18 years.

Claims volatility has been discussed in previous reviews over the last decade. Since the late 1980’s claims inflation was relatively foreseeable and progressive. There has however been a marked increase in claims volatility since 2006/07. The graph demonstrates this pattern. This trend is shown most starkly in the gross paid claims results but the fluctuation in net paid and net incurred claims is similarly less predictable over the most recent 10 years.