In its 2017 report on the P&I Clubs, broker Jardine Lloyd Thompson asked all of the clubs a list of questions. Here are the responses of American Club, Britannia and Gard to one of those questions. Over coming days IMN will be printing the responses of other P&I Clubs to this question.
Q: Many of our clients would rather see P&I rates reduced upfront rather than excess capital returned or call instalments discounted or waived later in the day. We understand that clubs aim to offer long-term stability but, with club surpluses at today’s record levels, is there not a case for saying that P&I rates overall could be reduced by a margin that would be beneficial to club members without risking the stability of club finances?
American Club said that there might be a case to be made for the approach highlighted in the question. However, the Club felt that, regardless of renewal-to-renewal policy, “you would no doubt agree that the continuing, day-to-day rating of fleets generally, and individual new additions in particular, have never been more keenly calibrated than they are at present!”
Britannia said that fair rating of vessels remained crucial. Britannia noted that it had long-term relationships with the majority of its members – with almost 50% having been with the club for more than 20 years. The Club said that return of calls through waivers and, in particular, capital distributions combined with the traditional call approach – with an extended timeframe given to our members to pay – ensured that members’ contribution was fair and reasonable, while benefiting from the club’s financial strength.
Gard said that it was entirely understandable that shipowners would be concerned about their bottom line. Gard said that its premium policy was based on a strategy of long-term steadiness and sustainability. “We want to support our shipowners in challenging times by keeping costs as low as possible”, the Club said.
The Club noted that, as well as having been modest in premium setting over recent years, it had a well-established procedure that allowed excess capital to be returned to the membership by a reduction in the last instalment of premium which is deferred to the year after the policy year in question.
Gard said that the excess capital in the insurance market meant that at the moment pricing was very competitive, and poor shipping conditions would mean that buyers were looking for the best possible prices. “This combination means that buyers will, of course, look at all possible solutions. It is those choices that shape the marketplace and its participants. It is our job to make our mutual offering as robust as possible.”