Following a Board of Directors meeting, London-based Steamship Mutual announced that it has “reviewed the Club’s open policy years, as well as claims in earlier years, and considered the premium ratings required for the 2014 policy year.”
On the basis of “owned claims reported to date, the overall value of claims for the current policy year is expected to be high,” said the announcement, adding that this continues a “trend of recent years. It was noted that the total value of claims in the layer up to $250,000 is marginally below last year, with 15 percent fewer claims being offset by a 10 percent increase in the average cost of claims, the value of claims estimated in excess of $250,000, net of applicable reinsurance, is 20 percent higher than last year reflecting a significant increase in the number of higher value claims.”
The announcement explained that the “Directors considered the outlook for the Association’s underwriting performance, and the adverse impact upon that performance of claims over the last 3 policy years. Whilst acknowledging that the economic downturn continues to affect some Members, they concluded that premium levels should nevertheless be increased by 10 percent across all entries and for all categories of business, with minimum deductibles for all P&I entries of $7,500 for crew claims, and $15,000 for all claims other than crew and cargo, the latter remaining at US$5,000.
“Records will be assessed in the usual way, with particular attention to adverse claims performance and increasing exposure. Any adjustments in the costs of the International Group reinsurance program, whether up or down, will be passed on to Members.
“The Directors decided that the release calls on the 2011/12 and 2012/13 years will be maintained at 5 percent and 10 percent respectively and that the release calls for the current year and 2014/15 will be set at 25 percent.”
CEO Gary Rynsard commented:
“Given the continuing difficulties in the freight market the Board has only after most careful deliberation concluded that the increase in overall cost of claims necessitates an increase in premiums. The Board also believes that an increase in Members’ risk retention by way of a small increase in deductibles would be of benefit both to the Club and ultimately the Members themselves.”
Source: Steamship Mutual