The UK
P&I Club Board has agreed a general increase in premium rating of
17.5 per cent plus the relevant contribution to the cost of the
International Group's 2004 reinsurance programme.
The Club directors took the decision at
their Board meeting in Bermuda on
Monday, October 20th when they reviewed the development of the Club's funds
and claims. The results of this review were published today (Wednesday,
22nd) in a circular to Members.
There has been a strong investment performance, with a return of eight per
cent recorded for the seven months from February to September.
Furthermore, the Club's reserve strength, combined with the protection of
the Swiss Re reinsurance contract, means that the supplementary premium
estimates for all the open policy years (2001, 2002 and 2003) are maintained
at nil.
However, there is now clear evidence of an increasing trend in claims. While
the claims projections for the policy years up to and including 2001 have
shown an overall improvement, there is confirmation of a significant
increase in the cost of claims falling on the 2002 year. Looking ahead, it
is anticipated that favourable
market conditions for the shipping industry, with resulting higher levels of
ship utilisation, will produce an increased level of claims.
Against this changing claims environment, the Board has decided to order a
general increase of 17½ per cent in Members' premium ratings for the 2004
policy year, plus any relevant increase in the cost of the International
Group's reinsurance arrangements for 2004. (At this stage, the cost and
structure of the reinsurance arrangements are not clear).
The Club recognises that this increase will be unwelcome but believes it is
in the best interests of Members to take these steps to maintain its
financial strength.
Mutual premiums for 2004 will be payable in four equal instalments, three
during the policy year by 20th March, 1st June and 1st September, and the
fourth by 1st December in the following year (2005). The estimate of
supplementary premium is nil.
Hugo Wynn-Williams, Deputy Chairman of Thomas Milller (P&I) Ltd., explained:
"The improvement in earlier open policy years and the favourable investment
return shown in the Club's half-year figures are very welcome. However,
the clear upward trend of claims in 2002, which is a result of the strong
shipping market, is likely to continue into 2003. The strong investment
performance in the current year to date cannot be relied upon to continue
into next year. Accordingly, the Board ordered the increase to address the
anticipated level of claims."