2008/2009 Renewal

CIRCULATED TO ALL  MEMBERS, BROKERS AND DIRECTORS

P&I Class

The Directors continuously review the Club’s overall financial position against the Club’s financial objectives, and the Directors are pleased that the Club’s overall position remains strong and in turn the Board remains committed to progressing the long term financial strength and stability of the Club.

As identified last year the Club’s operating environment is inextricably influenced by the considerable increase in the frequency and cost of claims, particularly large claims, which is not expected to recede in the foreseeable future.  In addition to an increase in the cost of Members’ own claims, the Club has been impacted by an extraordinary increase in claims on the International Group Pool.

In order to maintain the Club’s strong financial position the Board have decided that for the forthcoming policy year, there will be an overall General Increase in premium rates of 17.5%.

In view of the projected costs of International Group Pool claims, the Directors have decided that the General Increase should be applied in two parts as follows.

• An increase of 7.5%, directly attributable to increased Pool claim costs, and as such not dependent upon the individual record and risk exposure of Members.
• An increase of 10%, which will be dependent upon the individual record and risk exposure of Members.

The Directors also consider that deductible levels should increase to keep pace with the rising cost of claims, and as such they have decided that all deductible levels should increase by 10%.  The outcome of the International Group Reinsurance Contract renewal is not yet known, but as is customary any increase in reinsurance rates will be applied to Members’ premium.

Individual renewal proposals will be formulated and sent to Members in the next few weeks.

Premiums will be collected in four instalments during the policy year on 1 April, 2 June, 1 September and 1 December, 2008.  The Managers’ assessment of release calls is 20% of Estimated Total Premium.

FD&D Class

In common with the P&I Class the Directors continuously review the Class’s financial position and performance.  The Club’s strategy for this Class is to handle the vast majority of disputes and claims in-house and consequently a large team of multi jurisdictional legal professionals is employed.

The employment cost of the team represents a significant proportion of the income of the Class and is expected to rise in 2008/09 by 20%, partly as a result of further recruitment and partly as a result of the weakening Dollar which has fallen by 9% against Sterling in the last 12 months.

In view of the increase in costs and the prospects of an increasingly hostile claims environment, the Directors have decided that there will be a General Increase in premium rates of 10%

Premiums will be collected in two instalments on 1 April and 1 September, 2008.   The Managers’ assessment of release calls is 20% of Estimated Total Premium.

The Directors are confident that the measures outlined above will help to ensure the continued development of the Club’s long term financial strength and stability.

RC ECCLESTON

MANAGING DIRECTOR – North Insurance Management Limited

As Managers on behalf of the North of England P&I Association Limited