No general increase at Britannia, but Club aims for overall rise of 12.5%

Britannia P&I Club has continued with its policy of not announcing a default general increase, stating that for the 2022/23 renewal it would be adjusting Members’ individual rates based on their claims record and risk profile, while looking to achieve an overall increase of 12.5% in the Estimated Total Call (ETC) for the 2022/23 policy year, before any Group Excess of Loss (GXL) rate adjustment.

Minimum deductibles will be increased to the following levels.

  • Crew $6,000
  • Cargo $18,500
  • All Others $12,500

A further capital distribution of $25m will be made to mutual P&I Members with ships on risk at midnight (BST) on October 19th 2021. The distribution will be made from December 6th 2021.

Britannia noted that this brought the total of capital distributed to Members since May 2017 to $120m.

It added that since October 2016 Members had benefited from deferred call waivers and capital distributions totalling $135m. “Britannia’s capital position remains strong, allowing for this further capital distribution. However, this is different from rates, which need to increase given the underwriting deficit”, the Club said.

In Class 3 P&I the release calls percentages will be:

  • 2019/20        NIL
  • 2020/21        5%
  • 2021/22        7.5%
  • 2022/23        15%

In Class 6 FD&D:

At renewal 2018/19 the initial cost absorbed by Britannia of $5,000 per claim was increased to $7,500. At renewal 2019/20 Members’ one-third contribution to all costs in excess of $7,500 was limited to a maximum of $150,000 per claim.

The 2021/22 rate increase was the first increase since 2013/14. The Club said that an additional adjustment to premium rate for 2022/23 was required to address the continuing underwriting deficit.

Summarizing its decisions, Britannia said that “we believe our approach to the 2022/23 renewal, together with the additional capital distribution, demonstrates Britannia’s clear commitment to addressing the underwriting imbalance through sustainable levels of premium that meet claims exposure while continuing to provide our members with the benefits of financial strength together with exceptional service.”

The Club noted that since 2020 it had implemented the strategic aim of returning its combined ratio to 100%. To achieve this, modest rate increases were introduced in both 2020/21 and 2021/22. However, the Club said that premium levels remained insufficient to achieve its 100% CR target, meaning that further corrective action was required at the 2022/23 renewal.

While Britannia said that it had seen further growth across all areas, it also noted that this had been achieved against a very challenging claims environment, particularly for Pool claims, as well as continued pressure on rates. The combined effect had resulted in a projected deficit for the 2021/22 policy year higher than originally forecast.

The Club noted that retention claims in the current policy year were running below projections, including the impact of claims relating to Covid-19. By contrast, pool claims were at the highest level ever recorded at this stage of a policy year. The combined effect of high pool claims and rates which have been consistently low for a number of years meant that the policy year result was projected to be worse than originally forecast.