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Circular 8/96: Limit On Cover
TO THE MEMBERS
LIMIT ON COVER
As anticipated in the Chairman's letter in August, the Board has now had the opportunity at its meeting on 21st October to decide the optimum level for a limit on the Association's cover for claims other than oil pollution.
The Board accepted the recommendation of the working group which it had previously established to study all aspects of this issue, that the figure should be $4 billion.
In coming to this recommendation the working group had concentrated on the extent of the cover realistically required by individual shipowners as well as upon the more familiar question of how much the Association could expect to raise by a combination of the optimum utilisation of market reinsurance and overspill calls. They thus sought to balance the exposure of mutual Members as, on the one hand, individual insureds facing potential catastrophic claims and on the other, as collective insurers facing potential overspill calls.
Over the coming months, the Managers and individual Directors will be discussing the Board's decision and the reasoning that lies behind it with Members, shipowners' organisations and the industry generally. The Board intends to review in the coming year the results of these contacts with a view to pursuing its objective of limiting cover to a realistic figure while continuing to pool claims with all Clubs in the International Group, sharing the Pool's reinsurance and overspill arrangements, which in the o pinion of the Board remains of great benefit to Members and to the Association.
THOS R. MILLER & SON (BERMUDA)