At their Board meeting in Athens on 17th October, our Directors decided that premium rating should be increased by three percent for 2012.
This decision was taken in response to continuing underlying claims inflation. Although the frequency of claims had reduced significantly in 2009, 2010 and 2011, the average cost per claim has continued to increase over this period.
Our chairman Dino Caroussis explained the decision.
“We were determined to strike a balance between ensuring our premium does not fall behind claims inflation while at the same time doing all we could to limit the impact of the increase on our shipowner members. Although we have been fortunate to enjoy lower claims numbers, there is still an average inflation on P&I claims of around 5 per cent. This underlying inflation will quickly manifest itself in our claims costs once the frequency picks up again, as it surely will one day. Taking all of this into account we set the general increase for 2012 at 3 per cent.
The Club’s October Review 2011 provides the half-year figures for the 2011/2012 year which were reviewed by the Board at their meeting.
“This strengthening of our financial position has been largely brought about by a reduction in the number of claims, driven mainly by the drop in world trade. But we have also been able to contribute to that reduction by careful management of our risks.”
Mr Caroussis also commented on the encouraging developments in the Club’s financial standing, “Free reserves have been rebuilt. Last year these stood at $478 million. Today, those reserves have grown to $486 million. The Club’s capital adequacy as measured by S&P’s capital model is now in the AAA range and we have free reserves of $4.50 per ton.”
Formal publication of the general increase announcement can be found in the Circular 12/11 which is being mailed to all Members and their brokers together with the Club’s October Review. Both these publications and the Circular 13/11 reporting the Annual General Meeting also held that day can be found in the Publications section of this website.