In its renewal update for policy year 2023/24, Skuld has said that, as has been its strategy for the past few years, it would not impose a General Increase but would instead focus on individual member performance. It advised members that they would have to expect to pay more for the coming policy year. The Club will seek to achieve an overall 10% increase in mutual Estimated Total call (ETC), before adjustment because of changes in the International Group reinsurance programme.
The Club said that it planned to clarify loss records for mutual members and to introduce abatement for large claims ($3m or above).
Skuld noted that, despite a benign 2022-23 policy year to date, the mutual P&I book was still running at a combined ratio of above 100%. The contribution of commercial products reduced the overall CR to 95% at the mid-year point (August 20th 2022) Investment income was termed “volatile”.
Following the Board’s meeting in Hamilton, Bermuda, on November 9th, Skuld said that there had been a gradual improvement in the financial performance of the mutual product. Achieving rating adequacy had been an aim over the past two renewals, particularly at the most recent renewal. However Skuld said that there was “still some way to go to ensure that this product on an overall level will alleviate the industry-wide concerns in terms of performance”. Skuld noted the continuous focus from ratings agencies.
The insurer said that there were early signs that claims costs were increasing due to inflation, but the full effect of the global impact of inflation was yet to be realized.
There had been a significant level of investment market volatility during 2022, but Skuld, without going into details, said that its own solvency position remained strong.
Large claims performance this year had been benign across all products, but mutual performance on its own was still producing a negative technical result. On an operational level all products combined produced a positive result (95% CR) at the half-year stage. “This has shown the importance of the efforts to improve the performance of the mutual portfolio, particularly at the last renewal in order to achieve the combined-ratio targets agreed”, said Skuld.
Commercial products had performed well; on an overall basis the portfolio of commercial business had grown throughout 2022.
Skuld said that all mutual P&I records that were used to negotiate the upcoming renewal would be abated at $3m. This would help clearly identify all mutual members’ individual large claims contributions. Furthermore, all Charterers and Fixed P&I records would now include costs of running the business.
The applicable release calls are:
- 2020/21 = 7.5%
- 2021/22 = 10%
- 2022/23 = 15%
- 2023/24 = 15%