American Steamship Owners Mutual Protection and Indemnity Association (American Club) said it will increase premiums 10 percent on all classes of premium (mutual and fixed-premium) for both protection and indemnity insurance and freight, demurrage and defense insurance for the policy year starting Feb. 20.
The company said its directors decided on the increase after looking at the near- and longer-term implications of the economic climate, emerging trends within the P&I environment, and the extremely difficult trading conditions for shipowners and charterers.
"The club continues to make steady progress in achieving its targets. Although premium rates per ton have experienced some reductions during the past 12 months due to the ‘churn’ effect of older, higher-rated vessels being replaced by newer, lower-rated ships, entered tonnage has remained stable, and the level of the club’s retained claims has developed satisfactorily," the American Club said.
"Investments have done comparatively well this year, and at mid-November the portfolio had earned a year-to-date return of 6.1 percent adding strength to the overall performance of the club. Given these trends, the club was able to grow both its GAAP surplus (as calculated using generally accepted accounting principals) and statutory surplus during the year. The statutory surplus grew by approximately $4.7 million during the nine months to Sept. 30 to $69.7 million, while the GAAP surplus rose by just under $1 million to $61.2 million during the same period," it added.
The club said closed years have a healthy excess of assets over liabilities and the contingency fund totalled about $60 million at Sept. 30, an increase of some 10 percent over the position 12 months earlier.
For open years the release call for 2010 has been reduced from 25 percent to 5 percent; for 2011 it has been reduced from 25 percent to 15 percent; and for 2012 it will remain at 20 percent.
Joe Hughes, chairman and chief executive officer of the Shipowners Claims Bureau Inc., managers of the American Club, said the directors of the club concluded that, while the 2011 and 2012 results continue broadly to exhibit the more benign trends for retained claims which featured so strongly in 2010, they have nonetheless been affected by a continuing lack of pricing power and rising external costs, notably that of pooling. Further, longer-term trends suggest that some allowance must be made for mounting exposures over the year ahead, particularly those driven by claims inflation.
Hughes said pool claims remain a source of concern, with claims levels for both 2011 and 2012 to date being among the highest ever experienced.
“The directors’ decision regarding premium rating for 2013 was intended to reflect a balanced view of the business landscape which lies ahead," he said. - Chris Dupin