Despite a continued upward trend in the cost of claims and additional reinsurance costs, The Shipowners’ Club, P&I insurance provider to the smaller and specialist vessel sector, is to raise premiums by just 5% for the 2014/15 renewal.
Announcing its half year (2013/14) financial results Shipowners, which minimized its premium rise at the last renewal to a market low of 5%, will keep next year’s increase to a similar small rise. In the P&I Club’s Half-year Report, issued yesterday, Chief Executive Charles Hume stated, “We appreciate that any increase is unwelcome and we recognize that it is necessary to achieve a balance between ensuring the long-term financial security of the Club and recognizing the financial challenges faced by many Members in the current economic climate. As Members and brokers will be aware, our track record of general increases is the most competitive in the market and we intend to keep it that way.”
Highlighted in the half-year report is the continued growth in both premium and tonnage entered in the Club. In the first six months of the trading year earned premiums are up some 11.5% at $120.3 million, of which $5 million represents new business over the same period, when compared to the previous year. Vessel tonnage entered stands at 24.47 million GT, an increase of 18.6%.
As indicated, though, claims are also trending upwards both in frequency and value, net of reinsurance. There was particular volatility in the second quarter with the impact from claims within the $1-5 million band having the most effect.
Charles Hume noted that these trends were consistent with reports from the market in general. “We will be monitoring the claims position for the third quarter very closely,” he commented.
The report shows that the Club remains in a strong financial position with a surplus of $1.1 million for the first six months and an increase in capital and free reserves to $276.7 million. The combined ratio for the period is 98.4% against 95.5% for the full 2012/13 year; excluding some small improvements in back years the pure year combined ratio is 100.6%.
Hume continued, “The 5% general increase continues to include the increased costs of reinsurance. It is inevitable that these costs will rise again and, uniquely within the International Group, the Club is absorbing them within the general increase. We intend to utilize the Club’s very strong capital position for the benefit of the membership to ensure that the likely increase in reinsurance costs is mitigated.”
“We place the utmost value on the long-term relationships that we develop with our Members whose financial interests, we believe, are ultimately best served by the stability and continuity of entry with the Club,” concluded Charles Hume. “In turn we thank both our Members and their brokers for their long-standing support.”