North P&I Club directors decide on 3% general premium increase

Tuesday, 2nd November 2010

Shipowner directors of the 125 million GT North P&I club have decided on a modest 3% general premium increase for protection and indemnity (P&I) cover in 2011/12, reflecting their commitment to maintaining the ‘A’ rated club’s financial strength in an uncertain market.

Chairman Albert Engelsman of Dutch shipping group Wagenborg says, ‘North’s finances are in a strong position; however the board recognises the club is not immune to the ongoing period of financial uncertainty that is forecast and consequently we must remain vigilant. The directors are committed to maintaining the financial strength of the club and therefore we have decided to apply a general increase of 3% to P&I premium rates.’

Joint managing director Paul Jennings says, ‘Although claims experience for the current year compares favourably with previous years, the board recognises the inherently volatile nature of P&I claims, the impact of claims inflation and the operational challenges faced by shipowners. These factors have been taken into consideration when assessing the general increase and we have assumed that claims will follow the same trend experienced over the past five years. However, the relatively modest nature of the increase recognises the particularly strong financial performance of the club.’

Joint managing director Alan Wilson says, ‘Our cautious financial approach underpins our objective of providing financial stability to members. We are now entering the twentieth consecutive year without calling on members for unbudgeted supplementary funding.’

He says the club continued to adopt a defensive approach to investment strategy to match its objective of capital preservation, and the board remains of the view that this low-risk investment strategy – which produced a return of 3.7% in the first seven months of 2010/11 – should be maintained. ‘This positive investment result, together with lower claims levels should, absent unusual events, lead to a healthy increase in the free reserve at 20 February 2011 renewal,’ says Wilson. North’s free reserve at the 2010 renewal reached US$240.3 million.

The directors have also decided to increase P&I deductible levels below US$5000 by US$1000. The club’s freight, demurrage and defence (FD&D) rates will increase by 10%. Members’ rates will also be adjusted to reflect any increases or reductions in the cost of the International Group Excess Loss Reinsurance Programme.

North provides P&I insurance to 95 million GT of owned tonnage and 30 million GT of chartered tonnage, with 4250 ships entered by 375 members. The club is based in Newcastle-upon-Tyne, UK with regional offices in Hong Kong, Piraeus and Singapore.

North of England P&I Association, press release