Published 15 October 1997
Circular No. 6/97 October 1997
TO THE MEMBERS
Dear Sirs,
ELECTION OF CHAIRMAN AND VICE-CHAIRMAN CLOSING OF THE 1994 POLICY YEAR OPEN YEARS PREMIUM RATING FOR THE 1998 POLICY YEAR
At the Committee meeting in Monte-Carlo on 27 October 1997, the Committee re-elected Mr Erik F. Johnsen of Central Gulf Lines Inc, New Orleans as its Chairman. Mr Leif Terje Løddesøl of Wilh. Wilhelmsen ASA, Oslo, was elected as new Vice-Chairman.
The Committee also considered the progress of all open policy years and set the premium rating for the policy year commencing on 20 February 1998. The Committee decided to:
Close the 1994 policy year without further contribution.
Adjust release calls on open years in the light of current forecasts.
Order no general increase in the premium for owner's and charterer's entries for the 1998 policy year.
The remainder of this circular discusses these decisions in more detail.
CLOSING OF THE 1994 POLICY YEAR
The Committee closed the 1994 policy year without levying any further contribution. The claims development for this year continues to be favourable and the year is expected to end in a surplus.
OPEN YEARS
1995 policy year
A contribution of 15 per cent, half the supplementary call originally forecast, was levied in July 1996. The year has experienced almost no large claims and has developed into one of the most favourable policy year of the nineties. The current estimate for the year is a surplus and the Committee does not anticipate that a further contribution will be required.
The release contribution for this year was set at 5 per cent.
1996 policy year
The value of reported claims for owner's and charterer's entries in this year increased by about 20 per cent compared with the 1995 policy year figures at twelve months from inception. However, due to the fact that the Association's contingency reserve currently exceeds the strategic goal set by the Committee, it is not anticipated that any contribution will be required, even if the expected claims outcome for this year is somewhat worse than average.
The release contribution for this year was set at 5 per cent.
1997 policy year
The first six months of the year have seen a decrease in the Association's reported liabilities compared with 1996 figures. The value of reported claims for the 1997 policy year is 28 per cent lower than the corresponding 1996 figures. It should be noted that the current policy year so far has seen a reduction in cases showing liabilities between USD 200,000 and USD 2 million. On the other hand, there has been a slight increase in the number of reported claims, although this increase should be seen against the significant growth in the entered tonnage.
The release contribution for this year was set at 55 per cent, 25 per cent above the estimated contribution.
PREMIUM RATING FOR THE 1998 POLICY YEAR
Owner's entries
Against the background of the Association's contingency reserve exceeding the strategic goal set by the Committee and the fact that there are no signs supporting a conclusion that claims will increase in 1998, the Committee decided to order no general increase in the premium for owner's P&I and Defence entries for the 1998 policy year.
The estimated contribution for the 1998 policy year was set at 30 per cent of the advance premium, and the release contribution for the year was set at 55 per cent, 25 per cent above the estimated contribution.
Charterers' entries
There will be no general increase in premiums for charterer's P&I and Defence entries. The overall limit of cover available for charterer's P&I entries will be advised as soon as it has been determined.
Mobile offshore units
A separate Circular will be issued in December this year for mobile offshore units, when the overall limit of cover available together with the standard conditions will be advised as determined.
Defence entries
A circular will be issued in December regarding Defence entries' rules and deductibles.
Individual Premium Rating
Each Member's estimated total call will, as usual, be assessed individually in the light of his loss record and the cost of reinsurance. All Members will receive shortly the loss record for their respective fleets.
Members who have not heard from the Association by 20 January 1998 may assume that there will be no changes in the premium rating for next year save for adjustments based on changes in the reinsurance rates.
Advance premium, assessed according to the above criteria, will be debited in three instalments and falls due on 20 March, 5 July and 5 November 1998. However, P&I premiums not exceeding USD 5,000 per vessel and Defence premiums will be debited in one instalment falling due on 20 March 1998.
Deductibles
P&I entries
Standard deductibles for P&I risks applicable for the 1998 policy year will be unchanged from those for the 1997 policy year.
SUMMARY
To summarise, the following decisions were taken:
1995 - 5 per cent 1996 - 5 per cent 1997 - 55 per cent 1998 - 55 per cent
Yours faithfully, ASSURANCEFORENINGEN GARD -gjensidig-
John G. Bernander Managing Director
Gard is a member of
