General Increase of 12.5% at Standard after CR this year predicted to be 115%

Standard Club will be applying a general increase of 12.5% to owners/members’ P&I and FDD premiums on February 20th 2022, the beginning of the 2022/23 policy year.

Standard Club said on November 9th that it had made positive progress at the last renewal towards its goal of breakeven underwriting. However, while the 2021/22 policy year was now predicted to perform materially better than 2020/21, the policy year combined ratio was anticipated to be in the region of 115%, which remained above the target set by the club board.

The Club said that this was primarily due to the frequency and cost of large claims in the International Group Pool and because of Covid-related claims. It also reflected the general low level of premium rating across the industry.

Standard Club said that the first six months of the current policy year had seen a reduction in the frequency of other clubs’ Pool claims. However, the average value of these claims had increased significantly, generating claims estimates of a similar magnitude to 2020/21.

It said that its investment portfolio remained defensively positioned and the return on it was not expected to offset the underwriting deficit.

In addition to P&I rate adjustments, Standard Club said that, having not published a specific P&I deductible adjustment for two years, the board had determined to increase all deductibles by 10%, subject to a minimum increase of $2,500 for crew and cargo and $7,500 for collision/fixed and floating objects.

Standard Club will be applying additional premium adjustments for any owners/members who prefer to maintain their existing deductibles.

There will be no change to FDD deductibles.

Additional costs in respect of the International Group excess of loss reinsurance programme will be passed to owners and members. Similarly, the Club warned that the cost of its non-pool reinsurance programme had increased and indications were that it was expected to increase further into 2022/23.

Owners and members whose ratings levels are currently insufficient to cover the cost of their own claims, reinsurance, and a proportionate share of large market losses, would need to increase their contributions in excess of the general increase.

Open Policy Years

In the P&I class the club’s own claims in respect of the 2020/21 policy year had developed slightly better than expected since February 20th 2021. However, as had previously been reported, the record level of large claims incurred within the International Group Pool, and a material number of claims arising from the pandemic, meant that the policy year still had a significant underwriting loss. The combined ratio for that year has improved, but still stands at 124%.

Policy years 2019/20 and prior were largely performing as expected and reflected a marginal overall improvement in the level of estimated claims.

No call is expected in addition to Estimated Total Premium (ETP) for all open policy years; release call percentages will remain at the levels set by the board earlier this year:

  • Nil for policy year 2019/20
  • 6% for 2020/21
  • 12.5% for the current policy year

The Defence Class continued to perform within expectations for all open policy years, and no call was expected in addition to Estimated Total Premium (ETP).

Release call percentages will remain in line with the P&I class – that is:

  • Nil for policy year 2019/20
  • 6% for 2020/21
  • 12.5% for the current policy year