Published 20 October 1998
Circular No. 7/98
October 1998
TO THE MEMBERS
Dear Sirs,
ELECTION OF CHAIRMAN AND VICE-CHAIRMAN
CLOSING OF THE 1995 POLICY YEAR
OPEN YEARS
PREMIUM RATING FOR THE 1999 POLICY YEAR
At the Committee meeting in Madrid on 26 October 1998, the Committee elected Mr Leif Terje Løddesøl of Wilh. Wilhelmsen ASA, Oslo, as its Chairman and Mr Stephen Pan of World-Wide Shipping Agency (S) Pte. Ltd., Singapore as its 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 1999. The Committee decided to:
Close the 1995 policy year without further contribution.
Adjust release contribution on open years in the light of current forecasts.
Order no general increase in the advance premium for owner?s and charterer?s entries for the 1999 policy year and to reduce the forecast contribution from 30 per cent to 25 per cent of the advance premium.
The remainder of this circular discusses these decisions in more detail.
CLOSING OF THE 1995 POLICY YEAR
The Committee closed the 1995 policy year without levying any further contribution. The policy year can be described as an average claims year and is expected to end in a surplus.
OPEN YEARS
1996 policy year
No contribution has been levied for this year, against a forecast contribution of 30 per cent.
The value of reported claims for owner?s and charterer?s entries in this year increased by about 12 per cent compared with the 1995 policy year figures at twelve months from inception. It is expected that the year will end in small deficit, but due to the fact that the Association?s contingency reserve meets the strategic objective set by the Committee, it is not anticipated that any contribution will be required.
The release contribution for this year was set at 5 per cent.
1997 policy year
The value of reported claims dropped some 14 per cent at twelve months from policy year inception compared to the year before and ended at a level similar to that of 1995. Based on this favourable claims development and the very healthy contingency reserve of the Association, for the second time in a row, no contribution has been levied against a forecast contribution of 30 per cent.
The release contribution for this year was set at 5 per cent.
1998 policy year
The first six months of the year have seen an increase in the Association?s reported liabilities compared to 1997 figures. The value of reported claims is 29 per cent higher than the corresponding 1997 figures. Although there has been an increase in cases on all levels, it is claims within the two higher bands that impact the total result. Claims between USD 200,000 and USD 2 million have nearly doubled whereas claims in the band between USD 2 million and USD 5 million have increased with about 45 per cent. There has also been a slight increase in the number of reported claims.
The release contribution for this year was set at 55 per cent, 25 per cent above the estimated contribution.
PREMIUM RATING FOR THE 1999 POLICY YEAR
Owner?s entries
Against the background of the strong policy year results being achieved over a number of years and the Association?s contingency reserve remaining towards the upper limit established by the Committee, the Committee decided to order no general increase in the advance premium for owner?s P&I and Defence entries for the 1999 policy year.
Furthermore, the estimated contribution for the 1999 policy year was reduced from 30 per cent to 25 per cent of the advance premium. The net result of this reduction in the estimated contribution is a reduction of some 3.85 per cent in the ETC premium for owner?s entries in the 1999 policy year.
The release contribution for the year was set at 50 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 charterers? 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.
Individual Premium Rating
Each Member's ETC premium 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 1999 may assume that there will be no changes in the premium rating for next year save for adjustments based on the reduction in the estimated contribution for owners? entries and 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 1999. 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 1999.
Deductibles
Standard deductibles for P&I and Defence risks applicable for the 1999 policy year will be unchanged from those for the 1998 policy year.
SUMMARY
To summarise, the following decisions were taken:
Yours faithfully,
ASSURANCEFORENINGEN GARD
-gjensidig-
John G. Bernander
Managing Director
Gard is a member of
