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Circular 4/09 (February 2009) 2009 Policy Year
- Overall cost of reinsurance to increase for 2009.
- Collective overspill reinsurance protection on behalf of each club in the Group purchased once again for the 2009 policy year.
- Club retention remains at US$7 million for 2009.
- Pooling structure to change for 2009.
- Oil pollution claims remain subject to a special limit under Rule 5B(ii) of US$1,000 million for owned ships.
- War risks P&I and US voyage surcharge premiums reported separately in Club circulars 2/09 and 3/09.
TO THE MEMBERS
2009 POLICY YEAR
The International Group’s general excess of loss contract has been renewed on the same terms and structure as for the 2008 policy year.
The overall cost of the Group's reinsurance, including the layers insured by the Group's captive Hydra, has increased by just under 15 per cent. As usual, the Group managers have assessed the contributions payable by different ship types to the overall cost of the Group's programme and, in adjusting the reinsurance rates for the different ship types, the Group managers have given consideration in particular to the claims record of those ships on the reinsurance programme over the years. The reinsurance rates are charged to the different ship categories on the same basis by all clubs in the Group.
Pooling arrangements for 2009
For the 2009 policy year, the Club retention remains at US$7 million. The Group Pooling arrangements will change in two respects; (1) the cap on the loss ratio adjustment to clubs’ proportions will increase to 60% from the current 30%; and (2) the upper Pool (the layer US$20 million excess of US$30 million) will merge into the lower Pool (US$23 million excess of US$7 million) with the result that clubs’ contribution to Pool claims will now be calculated on one uniform basis, namely the ‘one third’ basis currently used for the lower Pool apportionment. The old upper Pool layer will however continue to be reinsured by the Group captive, Hydra, and pre-funded by a premium contribution from each club. This premium is included in the reinsurance rates.
If a claim were to exceed US$2,050 million i.e. the limit of the Group excess of loss contract, the excess or overspill will be pooled amongst the Group clubs. The overall Group Pool limit for such an overspill remains unchanged at 2.5 per cent of the property limitation funds under the 1976 Limitation Convention of all mutual ships entered in the International Group clubs. Mutual Members remain ultimately liable to pay an overspill call up to a maximum of this limit for each entered ship, in accordance with Rule 22 of the Rules of the Association. For the 2009 policy year, the Group has once again purchased reinsurance protection on behalf of each club for an overspill claim of up to US$1,000 million. This reinsurance will be available to all Group clubs to reduce the need to make an overspill call on their members.
Oil pollution limit
The Board has determined in accordance with Rule 5B(ii) that with effect from 12 noon GMT on 20th February 2009 the limit of the Association's aggregate liability for claims in respect of oil pollution shall be: US$1,000 million each event in respect of each ship entered by or on behalf of an Owner not being a charterer other than a demise or bareboat charterer.
In accordance with Rule 5B(iii), with effect from 12 noon GMT on 20th February 2009, the Association's aggregate liability for any and all claims is limited to US$2,000 million each event in respect of liability to Passengers and to US$3,000 million each event in respect of liability to Passengers and Seamen, in respect of each ship entered by or on behalf of an Owner not being a charterer other than a demise or bare boat charterer.
War risks P&I
Details of the Club's special war risks P&I excess cover for the 2009 policy year are set out in the Club's Circular Ref 2/09.
Oil pollution risks in the United States - tanker voyage additional premium
Details of the additional premiums for 2009 are set out in the Club's Circular Ref 3/09.
THOMAS MILLER (BERMUDA) LTD.
- Members requiring further information should contact their usual Club contact.