UK P&I Club announces general increase for 2014 policy year
London, 31 October 2013, the Board of the UK P&I Club (the Club) has agreed at its meeting on 28 October 2013 that the general increase for 2014 renewal will be 10 per cent.
The premium rating increase is in addition to any increase in the cost of the International Group reinsurance premium for 2014 for the mutual Members, which will be determined next January.
Despite the prolonged shipping recession, the performance of both the Club's 2012 and 2013 policy years indicates P&I claims have resumed their upward trend. This environment of increasing claims costs requires premiums to move forward in line with that claims experience. Although claims frequency overall dropped steeply in 2009 and remained at the lower level, the average cost per claim has increased by 30 per cent since 2006. The total cost of claims in the first six months of 2013 is greater than any other policy year at the same stage of development.
The general increase reflects the Club's commitment to maintain balanced underwriting and protect against claims during a period of sustained underlying claim inflation. As and when the shipping market recovers, the Club anticipates a rebound in claims frequency from what have been record low levels.
Alan Olivier, newly elected chairman of the UK P&I Club said:
"Our decision to make a 10 per cent general increase reflects the Board's determination to keep the Club's underwriting in balance. Facing a choice between relatively modest premium increases in the short term or more substantial and painful increases in future, the Board does not view the latter option as being in the best long-term interests of its Members or the Club."
Hugo Wynn-Williams, chief executive of UK Club managers Thomas Miller P&I (Europe) said;
"Although the Club continues to hold sufficient capital to meet solvency and rating agency requirements, it can only preserve that position by maintaining balance over the claims cycle through disciplined underwriting. Increasing premiums in line with the rising overall claims trend is essential to achieve that underwriting balance."
Overall, the Club's financial position remains strong with the free reserves and capital standing at US$473million and total assets of US$1.6 billion at 20th August 2013. Since then, the position has improved with investment income increasing from $6million to $33 million to 23rd October. The UK Club's Standard and Poor's rating is A- (Strong) Outlook: Positive.
Thomas Miller P&I Ltd
Tel: +44 (0) 20 7283 4646