Shipowners' Club has joined other protection and indemnity clubs in announcing a general increase in 2020, but at a lower level than its rivals.
The UK insurer said it will add 5% to the cost of cover next year, after six years of no rises.
"While the club has a policy of underwriting to a breakeven position, the board has agreed for the last two years to utilise the club’s strong capital position in order to subsidise its underwriting position," it said.
"Therefore, the club has returned capital to members by providing insurance at below cost. However, this approach cannot be sustained indefinitely."
The 5% figure is inclusive of any adjustment for reinsurance premiums.
The London P&I Club was the latest this month to seek a general increase of 7.5% at the upcoming policy renewal.
This level has proved a favoured figure. So far the UK P&I Club, the Standard Club and Steamship Mutual have all said they are looking for a 7.5% increase in rates at renewal.
Deductibles to be renewed
Historically, Shipowners Club has not applied across-the-board increases in deductibles.
That policy will continue for 2020. However, a thorough review of all applicable deductible levels will be undertaken as part of the renewal process and increases may be requested where deductibles do not reflect either the frequency or quantum of claims, the club said.
"As with all previous renewals, the managers will review individual members’ claims records and operational risks, applying commensurate adjustments in terms where appropriate," it added.
The club reported a combined ratio of 105.9%, with an underwriting deficit of $5.7m, at the halfway point in 2019.
This represented a deficit marginally higher than budgeted, as claims rose in both 2018 and 2019.
Two $5m-plus claims impact result
It was impacted by two claims of more than $5m but also an increase in claims activity in the band between $500,000 and $5m.
"The club therefore anticipates that the underwriting deficit reported at the half year stage will continue for the 2019 year," it added.
Year to date return on investments has been higher than expected, with an overall gain of $32.8m recorded at the end of June.
This should be viewed in the context of an investment loss for 2018 of $28.8m, it said.
Looking ahead to 2020, the club expects to see continued growth in member numbers, vessels entered and total tonnage, building on the encouraging organic growth and also the new enquiries so far experienced during 2019, it added.
Claims are broadly expected to be in line with 2019.
"Whilst volatility in larger claims remains, the overall cost of lower value claims remains similar year on year with risk management, newer vessels and our ongoing focus on quality offsetting other inflationary factors," the club said.
"Claims frequency continues to fall year on year but the cost of the same claims today are higher than they were when the club last asked for a general increase in premium."
