Autumn Statement 2021
Your partner for a safer tomorrow at sea
Over the last eighteen months, we have witnessed the most dramatic change to working and economic conditions in our lifetime. However, the Club and the shipping industry have shown considerable resilience under these difficult circumstances.
The Club has had an encouraging start to the year. Despite the high profile incident involving the EVER GIVEN, the Club has benefitted from relatively few large claims during the first six months. Investment returns were also positive with a half year return of 3.8%, although investment markets remain volatile.
COVID-19 continues to impact the Club’s results and does not appear to be a one-off cost. 2020 saw the Club’s COVID-19 exposure dominated by a few large Cruise related claims; the 2021 year has been very different with a steady flow of relatively small Non-Cruise related claims amounting to approximately 5% of net mutual premium.
International Group Pool
The adverse Pool claims experience of 2020 has continued into 2021. After six months the number of Pool claims was consistent with previous years, however the estimated cost for these claims is the largest in history and the UK Club’s share of those claims exceed the Club’s own claims.
One of the key benefits of the mutual system is the ability to share these large losses across the shipping community, protecting individual shipowners and clubs from the full impact of such claims.
However, by sharing the cost of these claims it is also necessary for each shipowner to contribute sufficient premium to the mutual system to cover the overall cost.
Mutual premium rates continue to be insufficient to cover the associated claims and expenses – a common feature across the sector. The pressure on policy year results is increasing as large claims and reinsurance costs increase. The impact of the pandemic represents a new risk to the Club, further exacerbating the underlying inadequacy in premium rates. Action must be taken in order to restore premium levels and preserve financial stability going forward.
Members can read the statement in full below.