London – 23 November 2004 –  The 2005 Protection and Indemnity (P&I) renewal for ship owners is likely to see general rate rises of up to 12.5% in insurance premiums, according to Aon’s 2004/2005 P&I handbook. Though 2004 saw a positive financial correction for the mutual P&I Clubs underwriting P&I cover, concern over an increase in claim levels and indifferent investment returns will carry an air of caution into the 2005 renewal process.

In general, more disciplined underwriting by the Clubs has helped to restore ravaged balance sheets and rebuild financial positions going into 2005. This should lead to more emphasis on underwriting and better premium differentiation between good and bad records for ship owners.

The report also concludes:

• increasing regulation will lead to a further need to maintain adequate solvency levels;
• the reinsurance environment is neutral and the tariff rates are likely to remain neutral;

Commenting on the report, Stephen Hawke, Executive Director for Aon Marine said: “The financial outlook for the P&I Clubs has improved over the last year and we should begin to see evidence of this in the 2005 renewals.  Ship owners with good loss records should be taking advantage of this and will be looking to be rewarded for good management of their risks.

“Despite this, we expect the Clubs to approach 2005 with an air of caution. Any exuberance will be tempered by a pessimistic view of investment returns and P&I Clubs anticipating future increased solvency levels,” Hawke concluded.

Notes to Editors

About Aon
Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 51,000 professionals in its 600 offices in more than 120 countries.  Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.


This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results, depending on a variety of factors.  Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, resolution of regulatory issues, including those related to compensation arrangements with underwriters, pension funding, ultimate paid claims may be different from actuarial estimates and actuarial estimates may change over time, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs of resolution of contingent liabilities and other loss contingencies, and the heightened level of potential errors and omissions liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer reserves are under pressure.  Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s filings with the Securities and Exchange Commission.

 

Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.