The MV Dali is now the biggest single casualty to hit the protection and indemnity (P&I) insurance market. The container ship's collision with Baltimore's Francis Scott Key Bridge in March 2024 triggered a claim now reserved at over US$2.8 billion. That figure has exhausted the IG group reinsurance limit and entered the collective overspill layer, a protection mechanism that has never previously been called upon.
A midyear review published by Gallagher Specialty sets out what this means for the market heading into the 2027-28 renewal. It covers the 2025-26 results for all 12 International Group (IG) protection and indemnity (P&I) clubs - the mutuals that collectively insure the majority of the world's ocean-going tonnage - and Gallagher's prognosis on renewal pricing and market structure.
No overspill call has yet been triggered because approximately US$300 million of collective overspill reinsurance protection remains available. That layer is absorbing the exposure without clubs having to levy a charge against their members. The situation became more complex when a reinsurer initially declined to pay US$180 million of that protection.
The clubs temporarily funded the shortfall on behalf of their members. The reinsurer subsequently agreed to cover the claim. Had clubs been unable to bridge that gap, an overspill call would have required member clubs to levy additional charges on their shipowner members. Without the IG's combined free reserves of US$6.8 billion acting as a buffer, shortfalls at this scale could not be absorbed without triggering member calls.
The Dali loss is expected to develop beyond US$2.8 billion. Gallagher notes that losses to the higher reinsurance layers are no longer theoretical. Programme limits were raised to US$3.35 billion at the February renewal, and pricing those layers for 2027-28 is now an unresolved question - a dynamic that brokers placing marine business will need to account for in 2027 renewal conversations with shipowner clients.
Pool retained losses for 2025-26 came in at a shade over US$300 million, below the eight-year average. Gallagher expects that figure to increase over the next 12 months.
The 2025-26 market results show a combined underwriting loss of US$248.5 million, a 28% improvement on the prior year's US$352 million deficit. The average combined ratio ran between 105% and 108%. Investment income of US$1.13 billion fully offset that deficit and drove free reserves to an all-time high of US$6.8 billion.
The US$1.13 billion investment return exceeded US$1 billion for the first time. The report warns the current year is unlikely to match it. Post-year-end markets have been more volatile, driven by Middle East hostilities and oil price uncertainty.
Most combined ratios still sit above 100%, and the Dali reinsurance renewal is adding upward pressure on pricing. Three consecutive years of strong investment income have allowed clubs to limit general increases while reserves accumulated. Gallagher expects general increases of 2.5% to 5% for 2027-28, with reinsurance rates rising further in the freight, charterers and cargo segment.
The structural backdrop includes a significant consolidation in progress. The UK P&I Club and TT Club signed a framework agreement in June committing to a merger, with completion targeted for February 2027. The two clubs also submitted a joint acquisition offer for Thomas Miller Group, the management company that runs both mutuals.
More than 89% of Thomas Miller shareholders accepted that offer. The acquisition is expected to complete in the final quarter of 2026, subject to regulatory approval. Gallagher estimates the combined entity will rank among the three most strongly capitalised clubs in the IG. That move that follows the broader consolidation trend in the mutual P&I market that has reshaped the sector since NorthStandard's formation in 2022.
Across the mutual P&I sector, clubs are pursuing greater capital resilience as large individual losses and higher reinsurance costs reshape the economics of mutual underwriting.
