Despite the prolonged shipping recession, the performance of both the Club’s 2012 and 2013 policy years indicates P&I claims have resumed their upward trend. This environment of increasing claims costs requires premiums to move forward in line with that claims experience. Although claims frequency overall dropped steeply in 2009 and remained at the lower level, the average cost per claim has increased by 30 per cent since 2006. The total cost of claims in the first six months of 2013 is greater than any other policy year at the same stage of development.
The general increase reflects the Club’s commitment to maintain balanced underwriting and protect against claims during a period of sustained underlying claim inflation. As and when the shipping market recovers, the Club anticipates a rebound in claims frequency from what have been record low levels.
Alan Olivier, newly elected chairman of the UK P&I Club said:
“Our decision to make a 10 per cent general increase reflects the Board’s determination to keep the Club’s underwriting in balance. Facing a choice between relatively modest premium increases in the short term or more substantial and painful increases in future, the Board does not view the latter option as being in the best long-term interests of its Members or the Club.”
Hugo Wynn-Williams, chief executive of UK Club managers Thomas Miller P&I (Europe) said;
“Although the Club continues to hold sufficient capital to meet solvency and rating agency requirements, it can only preserve that position by maintaining balance over the claims cycle through disciplined underwriting. Increasing premiums in line with the rising overall claims trend is essential to achieve that underwriting balance.”
Overall, the Club’s financial position remains strong with the free reserves and capital standing at US$473million and total assets of US$1.6 billion at 20th August 2013. Since then, the position has improved with investment income increasing from $6million to $33 million to 23rd October. The UK Club’s Standard and Poor’s rating is A- (Strong) Outlook: Positive.
UK P&I Club
The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited is generally known as the UK P&I Club. As a mutual association, the UK Club has no outside shareholders and no financial links with other organisations. Since its establishment in 1869, the Club has existed solely for the benefit of its members. Its structure as a mutual insurance association enables it to respond to the changing needs of its assureds and allows it to provide superior service, attention and coverage.
The UK P&I Club is directed by the members. Overall control lies with the directors, elected by the members from amongst themselves. The directors normally meet four times a year to formulate policy on calls, the scope of cover, finance, underwriting and claims matters, reinsurance and issues affecting the P&I world. They resolve specific claims which may not fall clearly within the cover.
Thomas Miller, the Club’s managers, is organised to respond promptly to requests for assistance and to provide informed advice and help with members' claims. Individual support goes far beyond that normally provided by a commercial insurer.
The UK Club’s size and the scale of the managers' operations has enabled the latter to develop specialist skills and expertise seldom seen in marine P&I.
In 350 ports around the world, on-the-spot help and local expertise is always available to members and the masters of their ships from the Club's 460 correspondents and claims handling services and advice from the network of offices and branches in London, Piraeus, New Jersey, San Francisco, Hong Kong, Singapore, Tokyo, Beijing and Shanghai.
The Thomas Miller Group manages a number of world-leading mutual insurance organisations or “clubs,” providing insurance for shipping, transport and professional indemnity risks; and captive insurance companies in the Isle of Man and Bermuda. Thomas Miller provides risk management consultancy services and, through its regulated specialist subsidiaries, delivers a full investment management service to mutual clubs, captives and other clients. The firm incorporated in 1999 and is owned and controlled by its 550 employees worldwide.
UK P&I Club press release