Gard’s 5% P&I premium increase for 2013 looks likely trend

The rise in premium reflects an increase in claims that the clubs anticipate to strengthen during this year. According to Shipowners' Club its general 5% increase for the next P&I renewal on February 20, 2013 is due to a developing trend in the number and quantum of higher value claims. It said that this trend, which began in 2011, is even more pronounced in 2012. It believes that the 2011 claims position, in comparison with 2010, will show a 10% increase in the cost of claims per ton.hideThis trend has continued through the first half of the current year with claims in the higher value range of $1m to $5m 'increasing significantly in frequency' compared to the same period in 2011, it explained. "This pattern of claims makes it necessary to impose a general increase of 5% on premiums at the next renewal to ensure that the club's strong operating performance continues in 2013," said Shipowners' Club. The mutual club's chief executive, Charles Hume, said: "While we are happy to see the continued growth in the club as indicated by increases in both earned income and tonnage, we must also react to the trend of rising claims. In addition to our own retained claims we must anticipate an increase in the cost of our reinsurance programme and the directors have therefore decided that there should be a 5% increase in premiums, which will include any additional reinsurance cost." He added: "We appreciate that operating conditions remain difficult for many of our members but we must ensure that the club's premium income and claims remain in balance. We are confident that our members will recognise the importance of maintaining the club's financial security into the future." Explaining Gard's increase, its CEO, Claes Isacson, said the club's premium policy is to be as 'fair and as predictable as possible' and to offer P&I insurance at rates that ensure the club has adequately rated insurance portfolios. "Our business is about being prepared for the unexpected, and we have created a model that is built to handle risk-both financially and operationally. A key part of that is the correct rating of our mutual book, and we have a strategy of operating that on a combined ratio net of 105%-effectively running the P&I mutual portfolio below cost," he said. Gard also said this week that the 2009 policy year is closed with no supplementary calls being levied. It announced that no further deferred calls or supplementary calls are expected for the 2010 and 2011 policy years. In its half-yearly report published in mid-October, Shipowners' Club said that despite there being no general increase for the current year, earned premiums for the period are up by 4.4% compared with 2011 and entered tonnage is up by a similar percentage (4.3%). This growth has been carefully controlled and the performance for the period has remained strong with an underwriting surplus of $9.8m, it said. This represents a combined ratio of 90%. "The club's investment strategy is providing satisfactory results with both bond and equity portfolio returns ahead of expectations and a total return on investments of $6.1m," it said in a statement. This has contributed to an overall surplus for the six months of $15.6m, increasing free reserves to $250.4m.

Gard’s 5% P&I premium increase for 2013 looks likely trend

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