The Board of The Swedish Club has announced a 5% General Increase for P&I in 2020. The Club said that this reflected “the balanced approach adopted by the Club to meet the needs of its members and the need of the Club to keep premiums abreast with claims”.
Swedish Club noted that, after four years of zero general increases, the Club believed that premium levels across the industry had eroded to a point where expected claims could not adequately be met.
Investment returns had been healthy during 2019, but the Club did not anticipate generating similar levels of returns in future years, given the investment environment forecast.
There will be no General Increase on the FD&D class.
No reference was made to any general increase in deductibles.
The Club said that it was budgeting for a balanced result in 2020/2021.
Owners GT was now at 49.3m and Charterers at 32.0m. Following 2018, where the portfolio declined due to new sanctions legislation imposed by the United States towards Iran, the portfolio has recovered this year. The GT entered into the Club has increased by 4% since February 20th 2019
The Club’s targeted combined ratio of 100% for P&I for 2019/2020 would not be achieved, largely attributable to a high number of pool claims for the International Group. Pool claims deterioration for 2018/2019 started late in the last year and affected the Club negatively in 2019.
Average claim costs remain stable, although the current year was below expectations. Frequency of the Club’s own claims in excess of USD 500,000, as well as average cost of such claims, have increased for the 2019/2020 policy year. It was estimated that annual claims inflation would remain at about 3%.
The Club has so far had not had any pool claims during policy year 2019/2020.
The Club insures 1,260 vessels (46.1 million GT) for FD&D risks, up by 48 vessels since the same period last year. The Club employs 10 lawyers, including four qualified English solicitors. As of November 6th 2019 the Club was assisting its members in 961 claims, up by 18% compared to 2018. The average claims cost remained at a fairly stable level, the club said.
Club managing director Lars Rhodin said that this was a positive step for the future strength and sustainability of the Club: “Since we were established, our commitment has been for the long-term. The quality of our members and the strength of our business model has enabled us to offer four years without a general increase and two years of premium return to our members, in what have been difficult trading conditions.
He added that “in today’s claims climate, premium levels are no longer adequate, and we must act to continue to offer members the levels of quality service and support that they demand from us.”