The American Club has levied a 30% supplementary call on its shipowner members after a deterioration in prior year claims.
The New York-based protection and indemnity mutual said the negative trend in the development of the 2021 International Group of P&I Clubs pooled claims, and its own retained claims, had continued.
It was also affected by the reinsurance market’s decision to remove cover from Covid-19-related claims.
“… Your board has considered it necessary to levy a supplementary call of 30% of currently estimated total premium for the 2021 policy year,” the club said in a note to members.
The supplementary call will be collected in two instalments in October 2023 and January 2024.
The American Club pointed out it is faring better in 2022, after an increase in premium at this year’s renewal, and with no International Group pool claims reported in the first six months.
It has been affected by a downturn in the investment market that has resulted in unrealised losses. At the end of September, its contingency fund stood at just under $41m.
It reassured members that the action is intended to secure the future of the club.
“Your board is aware that elements of the American Club’s intended future action as set out above will not be welcome, but it remains resolute in its commitment to consolidate the financial standing of the club in order to provide a firm footing for the years ahead,” it said.
Hostile trends
The American Club has decided against setting a general increase for next year’s renewal, but wants to achieve an overall 10% increase in the pricing of risk to account for inflation and “hostile trends in the claims environment”. It said it would assess members individually based on their claims record and risk profile.
Adjustments will also be made to members’ deductibles.
“As has been the subject of extensive industry comment over recent months, premium pricing is still in need of upward adjustment, the more so given persistent levels of monetary inflation around the globe, and other factors,” it said.
