London, 24 September 2026 - Ongoing geopolitical tensions, combined with rising reinsurance costs, continue to drive volatility in the Protection and Indemnity (P&I) market, raising concerns about P&I clubs’ reliance on investment returns, according to Lockton’s 2026 P&I Market Report (opens a new window)
The Report, which provides an annual view of P&I market conditions, shows that clubs have built on strong foundations as they entered the 2026 policy year, but that financial agencies continue to place greater scrutiny on underwriting results, largely ignoring investment returns.
How is geopolitical risk affecting the P&I market?
Geopolitical turmoil is driving direct consequences for the War Risk Insurance market, including temporary cancellation notices, revised exclusions and the expansion of designated high-risk areas. The investment markets are experiencing greater volatility, creating operational challenges for shipowners, who often have limited visibility into war risk costs. Sanctions are also being impacted, resulting in shipowners and insurers having to work with often conflicting international regimes.
Gary Field, Chief Commercial Officer at Lockton P.L. Ferrari, said: “Our 2026 P&I Market Report shows that geopolitics is now a dominant factor in marine insurance markets. Whether through exposure to conflict, sanctions disruption, investment market instability, or reinsurance costs, global events are shaping market economics. While the International Group clubs enter 2027 in a position of relative stability, shipowners should expect geopolitics and reinsurance pressures to play a role in renewal negotiations over the coming year.”
2025/26 data showing greater stability from the P&I Clubs
The average combined ratio reported by the Group for 2025/26 was 102.5%, down from 104.9% in the preceding year. This translates into a relatively small three-year loss across the 12 clubs and broadly reflects a more settled claims experience compared to the volatility seen in 2024.
Underwriting results across the clubs improved in 2025/26. Despite this, the Group still reported a combined loss of $177m, resulting in an average deficit of $15m per club. This pushes the net underwriting loss over the last three years to $331m, up from $98m at the 2024/25 renewal.
Clubs saw exceptionally strong investment returns in 2025/26, with an average return of 8%, or $95m. This marks the third consecutive year of investment subsidy; across that period, Group-wide returns have totalled $2.63bn. Such impressive results have served to cushion the clubs against similarly long-running underwriting deficits.
How can P&I clubs manage the market volatility?
Lockton's analysis details how a number of clubs appear to be increasing their focus on diversification across product lines. Their rationale appears to be that such exposure to other marine market cycles can act as a counterweight to P&I market volatility. The focus will be on whether these market cycles do allow for greater stability in combined ratios.
Outlook
Pool claims development appears stable, and within budget at the halfway mark of the current policy year. But the typically volatile northern hemisphere winter is still to come, and the Baltimore Bridge incident will clearly impact the excess loss renewal. If investment markets remain flat, clubs could find themselves without the cushioning that they have grown accustomed to in recent years. Regardless, the need to sustain or improve their S&P ratings will add pressure to correcting deficit underwriting results. Lockton anticipates General Increases to be 5% on average in 2027.
For more insights, the full 2026 P&I Market Report can be found here (opens a new window).
Notes:
The report is published by Lockton Marine, the specialist marine division of Lockton. Our global team of marine experts delivers risk solutions to every corner of the marine world. Lockton P.L. Ferrari and Lockton Omni are part of our business.