November 20, 2003
American Club ups rates
The American P&I Club has announced a general increase of 17.5% in total premium for its P&I business for the 2004/2005 policy year. Any increase in the cost of the International Group's reinsurance program, which has not yet been determined, will also apply. Individual members' premium ratings will be adjusted in accordance with their loss records.
The Club's directors have also decided that the advance call will be 100% of estimated total premium, compared with 83% for the 2003 policy year advance call. The directors says this will improve the club's cashflow in 2004, bring it into line with practice in other International Group P&I clubs and create administrative efficiencies.
The club's general increase for its freight, demurrage and defence (FD&D) business is 10% for 2004. The release call has been fixed at 25% of the relevant advance call for both classes of business.
Commenting on open policy years, the directors noted that 2000 and 2001 were developing in line with expectations; but 2002 had shown some deterioration from earlier projections. The current year was satisfactory, showing a respectable surplus to date.
Following the very recent implementation of the club's new IT system, the managers will complete a further updated analysis of open-year results in the next few weeks and will advise members.
While acknowledging significant revenue development in recent months, the directors concluded that, as many other IG clubs had observed, "there remained a need to achieve levels of premium rating sufficient to match increasing exposures in a continuing hostile liability climate."
While recent gains in the equity markets had been encouraging, reliance on prospective investment performance was no substitute for solid underwriting results as the best way forward to continuing financial stability.
Joe Hughes, chairman and chief executive of Shipowners Claims Bureau Inc., the managers, said: "The directors realize that increases in premium, though always unwelcome, are necessary to maintain the club's financial strength and future progress."