The International Group of P&I Clubs’ $3bn Pooling and Group Excess of Loss (GXL) cover has been hit by its reinsurers’ decision to exclude Russian conflict-related war risks.
The International Group confirmed its $500m excess war placement, which is included in the GXL policy, would continue for 12 months but apply the “territorial exclusion language” introduced by reinsurers.
TradeWinds earlier reported how reinsurers have universally applied war exclusion clauses to all risks related to Russia, Belarus and Ukraine at their 1 January treaty renewals.
The International Group said negotiations are continuing over what cover can be provided. Its GXL policy renews on 20 February.
“The International Group is negotiating the availability of sub-limited cover for affected vessels, which remains an ongoing process,” it said in a statement.
“However, it appears available cover is likely to be on the basis of a significantly lower per-vessel limit than for the main excess war placement limit of $500m.
“The International Group will provide details of this cover in due course,” the International Group added.
Otherwise, the International Group said it had been able to successfully renew its reinsurance contract, “with only a small increase in rates for shipowners.”
Clean tankers and container ships have seen the biggest increases in reinsurance rates of 10.5% per gt.
However, passenger ships have not increased, while crude tankers have increased by 3.5% and bulk carriers by 6.2%.
Financial hit
The increase was caused by a deterioration of International Group prior year claims, and the financial hit taken by its reinsurers from Hurricane Ian and the Russia-Ukraine war.
Mike Hall, chairman of the International Group’s reinsurance committee, said he was pleased with the renewal in difficult circumstances.
“The International Group has shown that it has been able to weather the Covid-19 pandemic without a significant adverse impact to the GXL placement and despite the challenges presented by the Russia/Ukraine conflict,” he said
“The excellent communication between the International Group and the GXL leader, AXA XL, as well as with the International Group’s many longstanding reinsurance partners has helped all parties understand the importance of and unique nature of the International Group’s coverage requirements in support of the global shipping community,” he added.
Under the International Group pooling arrangement individual club members retain the cost of claims up to $10m. Claims costs are shared between International Group member clubs between $10m and $100m after which the GXL reinsurance policy kicks in.
