The Club has been experiencing very high levels of claims since 2006 (most particularly claims on the International Group Pool) and since the middle of 2007, a negative impact of the credit crunch on its investments. As a consequence, free reserves fell to just under $81M on February 20, 2008.
The Club announced that Additional Calls will now be levied and an increase in Advance Calls going forward is required.
The Club reports that the 2005/2006 policy year has developed satisfactorily and will be closed without further call. For 2006/2007, an Additional Call will be payable at 35 percent of the Estimated Total Cost (the ETC) for the year. For 2007/2008 an Additional Call is also to be paid at 35 per cent of the year’s ETC; and for 2008/09 the Additional Call is payable at 25 per cent of the ETC.
The Club has also set rates for Release Calls which are the equivalent, in respect of each open policy year, of Deferred and Additional Calls which have been set by the Committee, but not yet become due, plus the same 20 per cent release call uplift which has applied for many years.
The Club’s Committee also reached a decision on premium requirements for the forthcoming 2009/2010 policy year. Against the background of high claims and investment uncertainty, it determined a General Increase of 15 percent in Advance Calls, before adjustment in respect of individual records. Any adjustment to the cost of the Club’s share of the International Group’s excess loss reinsurance program, which has not yet been determined, will also be applied. The estimated Deferred Call for 2009/2010 has been set at 40 per cent of the Advance Call.