North announces 7.5% general increase

North of England Club has decided on a 7.5% general increase for policy year 2020/21 after projecting a combined ratio for 2019/20 of “in excess of last year’s 105%”.

The Club’s Pre-Renewal Report will be published on November 20th 2019 and will provide detailed information on the financial position and claims development during the current Policy Year.

The Club said that there had been an increase in the cost of Pool claims in the year to date, in line with the experience last year. It said that it had also seen a continuation in the trend of premium income erosion and an increase of high value claims. The Club expected free reserves to reduce, with the underwriting deficit will outweighing the investment return, which was $28.2m at the half year point.

The Club said that the financial position of the Club remained robust, with solid AAA S&P capital, but added that corrective action to address premium erosion would be required in order to halt any long-term decline in capital and to preserve the financial equilibrium of the Club.

The Directors said that “a transparent general rating increase is the most appropriate and equitable mechanism by which to notify Members of the Club’s overall budgetary requirements for the forthcoming policy year”. The Club felt that remedial action was necessary to resolve the enduring legacy of the recent “soft” marine insurance market.

As well as the 7.5% general increase in the P&I and FD&D Classes, all owned deductibles in the P&I Class below $25,000 would be increased by a minimum of $1,000 per deductible.

In both classes premiums will be adjusted to reflect individual Members’ claims performance and exposure.

For open policy years the following decisions were taken (both P&I and FD&D Classes):

2016/2017 The Policy Year was closed and the final cost was on target at 100% of the originally estimated total premium.

2017/2018 This Policy Year will be reviewed in May 2020. No additional calls are anticipated, and the final cost is expected to be on target at 100% of the originally estimated total premium. The Release Call is 0%.

2018/2019 This Policy Year will be reviewed in May 2020. No additional calls are anticipated, and the final cost is expected to be on target at 100% of the originally estimated total premium. The Release Call is 5%.

2019/2020 This Policy Year will be reviewed in May 2020. No additional calls are anticipated, and the final cost is expected to be on target at 100% of the originally estimated total premium. The Release Call is 15%.

2020/2021 The Manager’s assessment of Release Calls is 15%.

https://www.nepia.com/circulars/financial-review-and-renewal-2020/