Shipowner’s Club has announced that a 5% General Increase will be applied to all P&I and LCC premiums from February 20th 2021. This will be inclusive of any adjustment for reinsurance premiums. Premiums in respect of other additional covers will be assessed based on risk profile.
Although historically the Club has not applied across the board increases in deductibles, for 2021 that policy has changed. The Club noted that in some cases deductible levels had not been adjusted for more than 20 years. The board determined that a 10% increase in deductibles should be applied to all deductibles under $50,000. A minimum increase of $500 would be applied to deductibles that are currently under $5,000.
At the 2020 half-year stage the Club reported a Combined Ratio of 102.2%, with an underwriting deficit of $2.2m. This represented a deficit in line with expectations, even though this result was achieved against the turbulent backdrop of Covid-19. As a result of the pandemic the Club had experienced a lower incidence of claims, which in most cases was due to reduced vessel operations. However, this reduction was offset by some sizeable claims as a result of Covid-19 outbreaks on board vessels.
Claims to the 2020 Policy Year had continued to develop in line with budget, but the 2019 Policy Year had continued to show a much higher level of claims than any recent prior year, This was due to the Club’s own claims and because of contributions to the International Group’s Pooling mechanism. The Club continued to monitor cautiously the 2020 Policy Year and was making provisions for an even higher level of claims to the International Group Pool (as already notified), which would further impact the Club’s overall position.
The Club’s year-to-date return on investments was impacted by the market fluctuations resulting from Covid-19. An overall gain of $752,000 had been recorded by the end of June 2020. Since then the markets had continued to generate positive returns, but market volatility was such that the Club said that it could not place reliance on the investment portfolio to offset any underwriting shortfalls.
The Club said that it remained “absolutely committed to supporting Members by striving to maintain a supportive and sympathetic approach to claims, ensuring prompt settlement and continuing to provide cover for liabilities that may arise from Covid-19”.
The Club expected to see continued growth in Member numbers, vessels entered and total tonnage, building on the encouraging organic growth and also new enquiries that the Club had experienced so far this year.
Claim frequency was expected to revert to previous norms in 2021. It was hoped that claims to the International Group Pool would also moderate in 2021.