Protection and indemnity insurer Steamship Mutual has set a 5% general increase in premium for next year’s policy renewal but is also rewarding renewing shipowner members with a $25m cash windfall.
Steamship Mutual is the first of the 12 members of the International Group of P&I Clubs to announce its policy on premium for the February renewal.
The move is in line with broker predictions that P&I clubs are likely to target smaller rate increases.
Explaining the decision, Steamship Mutual said: “The board recognised the need for caution when projecting claims levels.”
Last year, Steamship Mutual set a 7.5% target.
The financial blow of higher premiums has been cushioned by a capital return to members also announced by Steamship Mutual.
Those shipowner members who renew their P&I policy with the club next February will get a 7.5% return on premium, subject to regulatory approval, which amounts to about $25m in total.
Steamship Mutual’s decision will be viewed as a welcome indication that P&I clubs are now on a firmer financial footing after three exceptional claims years led to double-digit increases in premium.
It is also a positive start for incoming chief executive Jonathan Andrews who took over from Stephen Martin earlier this year.
Steamship Mutual decided to redistribute capital after a positive first six months of the current financial year.
It said claims for the period, at $47.5m, came in below budget.
International Group pool claims, which cover claims of more than $10m, also continued to be at low levels.
Back-year claims also performed better than expected, allowing the club to release $13.3m from its reserves.
Steamship Mutual also recorded a $33m investment return for the first seven months of the year.
Owned tonnage increased by 3.6% to 120.6m gt.