In the International Group’s annual report, Mike Hall, Chairperson, Reinsurance Subcommittee outlined the changes in 2019/20 undertaken by the International Group of P&I Clubs
Following the Group reinsurance broker tender process carried out in 2018, the 2019/20 Group General Excess Loss and Collective Overspill reinsurance programme renewals were for the first time handled by the Group appointed co-brokers, Miller Insurance Services and Aon Benfield.
Historically, Miller Insurance Services had been responsible for placing the General Excess Loss programme and Aon Benfield had, since their appointment in 2009, been responsible for the placement of the reinsurance programme for the Group captive Hydra.
Hall said that both broking teams worked very effectively together in concluding another successful placement of the General Excess Loss and Collective Overspill programmes, achieving a further consecutive year of reductions in shipowners’ reinsurance costs across all vessel types.
In the claims environment , Hall said that the 2018/19 policy year largely mirrored the higher claims exposure of the previous year, with the overall claims severity proving slightly higher. The number of pool claims also slightly increased, with 26 claims engaging the pool reported to date.
A number of changes in the programme structure were introduced for 2019/20, including the introduction of an Annual Aggregate Deductible (AAD) in the first layer of the GXL programme, and changes in the attachment points of the upper layers of the programme.
There was no change for 2019/20 in the individual club retention ($10m per claim). The lower pool layer attaches from $10m to $50m and the upper pool layer attaches from $50m to $100m. The GXL reinsurance and private placements attach excess of $100m and a $100m horizontal AAD had been introduced in the first layer GXL market share.
Hydra’s participation for 2019/20 remained the same as for 2018/19 for the Lower and Upper Layers of the Pool up to $100m. The change introduced for 2019/20 was that, in place of its previous co-insurance within the first GXL layer, Hydra now fully reinsures the $100m AAD in the first GXL Layer market share for both Owners and Chartered entry P&I and Oil Pollution claims.
Two of the three existing private placements covering 5% each of the Group GXL programme remained in place for the 2019/20 policy year. The third private placement, which expired on 20 February 2019, was replaced by a new three-year private placement for 10% within the first GXL layer.
As well as the changes already outlined, the first layer of the GXL market share was increased to $750m excess of $100m (subject to the $100m AAD), and the second layer GXL market share was increased to $750m excess of $750m. The third layer for 2019/20 attached at $1.5bn with an upper limit of $2.1bn. As previously, the Collective Overspill layer of $1bn attached excess of $2.1bn.
Hall said that, looking ahead, the hardening of the market in some areas, and the impact of the performance reviews in Lloyd’s, could present a challenge.
“However, with the Group’s global reach and long proven track record, it’s enhanced broker expertise and the strength and support of the programme leaders as well as the continued interest in competitively priced private placements, the Group is confident of delivering another strong renewal for shipowners in 2020”, he said.