North P&I Club has announced its intention to seek a 10% general increase in P&I rates for the 2021/2022 policy year. North said the decision was prompted by a rapid rise in pool claims and unsustainable premium growth rates.
In its 2020 pre-renewal report, North said that retained claims so far this year declined, with claims over US$1 million dropping slightly. North also received a positive return on investments of 2.16% (about US$20 million) by its August mid-year point in spite of COVID-19-related market volatility, the club said.
“North’s response to COVID-19 has been outstanding and reflects our core purpose – to ensure our members can trade with confidence,” said Pratap Shirke, chairman of North P&I Club. “We continue to build strong foundations to deliver predictability, security and reliability for members. Our diversified lines are on target to meet business plan objectives, and we expect future growth in areas such as fixed-premium P&I, hull and machinery and aquaculture.”
However, the aggregate value of the 10 pool claims declared to the International Group of Clubs in the first half was the highest in at least 25 years, North said. This, in combination with the income pressures brought about by unsustainable premium rates, has prompted North to project a combined ratio of more than 110% as of February 20.
“The club remains financially strong and stable, and committed to delivering excellent service to our members,” said Paul Jennings, chief executive of North P&I Club. “However, all members expect full transparency from their club, and our projections suggest that a rating correction is now necessary. With little investment yield now available from the defensive positions that make up the majority of any prudent insurer’s investment portfolio, we do not expect returns to compensate for a forecast underwriting deficit, and we expect free reserves to reduce. The board has therefore agreed that the club will seek a 10% general increase in P&I rates for the 2021/2022 policy year. Individual renewals will, of course, be negotiated based on a detailed review and assessment of performance and risk exposure.”