P&I Rates Rising in 2013

The insurers said the rates increases are needed to keep portfolios adequate

P&I rates are set to rise in 2013 with the UK P&I Club saying it has set a general rate increase of 7.5 percent for 2013, while the Gard Group has set its increase at 5 percent.

The UK club also said it has declared a mutual premium discount of 2.5 percent on the total mutual call for 2011, which will amount to a 10 percent deduction for members for the final 2011 installment, due this December.

"The 7.5 per cent general increase reflects the Board's determination to keep the Club's underwriting in balance," it said in a statement.

"Given ship-owners are facing extremely challenging conditions and the Club's strong capital position it is reducing the premium on 2011 which was a good year for the Club.

"However, the Board feels it would be clearly against the interest of members if a club does not increase premiums in an inflationary environment and potentially create a problem for the future."

Gard, meanwhile, said the 2009 policy year is closed with no supplementary calls being levied, and it expects no further deferred or supplementary calls for 2010 or 2011.

The insurer said its increase for 2013 is designed to be as fair and predictable as possible for members while also ensuring that the club has adequately rated insurance portfolios.

"Our business is about being prepared for the unexpected, and we have created a model that is built to handle risk - both financially and operationally," said Gard CEO Claes Isacson.

"A key part of that is the correct rating of our mutual book, and we have a strategy of operating that on a combined ratio net of 105% - effectively running the P&I mutual portfolio below cost."