Strike club Reports Demand for War Risk Cover
General Increases of 10% & 5% are Maintained for 2012/13 Year Mutual Entries.
The Strike Club, the market leader in the niche area of delay insurance for the marine trades, reports continuing strong demand from both owners and charterers for its fixed-premium war risks insurance that offers cover to a limit of $200m. This is partly because the club is able to offer a ‘one stop shop’ war risks insurance to cover traditional hull & machinery risks, with tailored extensions as required; for example, loss of hire due to piracy even in the absence of a hull & machinery incident, or charterers’ loss of bunkers resulting from a hijacking etc.
After reviewing the Strike Club’s overall financial position at their recent board meeting in Geneva, the directors noted that the fixed-premium war risks and loss of earnings insurances continue to make a positive contribution to the overall results. The directors decided to call for a general increase of 10% for the 2012/13 policy year commencing February 1 next year for Classes I and II (shore-related risks), and a general increase of 5% for Class lll (ship-related risks). In addition, there will be a full review of each member’s exposure, cover, deductibles and record across all three classes.
The increases for the three classes are the same as those applied to the 2011 year. A release call of 30% was set for 2012/13 for Classes I and II, while the same rate was maintained for Class III. In Classes I and II, for the 2010/11 policy year, which will be closed in March 2012, claims developed at higher levels than initial projections in what proved to be a horrific year for strikes, major earthquakes and other catastrophes. However, said the directors, claims are now stabilising, enabling a reduction in the release call from 75% to 60%. The current policy year is developing much as expected, with a release call of 30% set.
In Class III, in the first few months of the 2010/11 year, claims also developed at higher levels than initially projected, but they subsequently stabilised. The release call is maintained at 30%, the same rate being set for the current policy year.
Bill Milligan, chief executive of S.C. Management, said the club’s results were considered satisfactory when seen against the ongoing turmoil in world shipping and financial markets. “There seems little doubt that strikes and other forms of industrial and political unrest will continue to have a serious and erosive impact on shipping operations,” he said, “and the directors are determined that the club’s financial position remains robust and adequate to meet future challenges and obligations.” He added: “The majority of owners and charterers now accept that financial protection is imperative to cover or offset delays in the transport chain. In addition to low-cost cover, club members have all the benefits of mutuality that the P&I system provides.”
In February this year, the club had a very strong renewal, with a retention rate of around 97%. The club, now in its 54th year of business, has maintained its S&P rating of BBB+ with a stable outlook. In August the agency said that the club’s capital adequacy remains extremely strong. In Geneva, the directors reviewed the studies undertaken by the managers over the last year to determine the optimum structure for the club to comply with the requirements of Solvency II, now scheduled to enter into force in 2013/14, and they instructed S.C. Management to commence the process of restructuring the club. Similar exercises are being conducted by a number of P&I mutuals. -ends-