C2 2014 - Rates and Terms for the 2015 Policy Year
The Directors have agreed that the gross rates of Annual Premium charged for 2014 (as set out in Circular C3/2013 dated 29 November 2013) will be reduced by 20% for the 2015 Policy Year. The Directors' decision, taken at their meeting on 24 November, has been announced to Members in Circular C2 2014 which sets out in full the Club's rates and terms for 2015.
The rate reduction means that most Members will pay a gross rate of 0.0044% for their annual war risks cover in 2015. The gross rate will be reduced by 50% in respect of Hull Interests (Increased Value, Freight and Disbursements) and all Members will receive 20% commission on the gross rate. Members with fleets valued at $100 million or more will be allowed additional commission, the amount of which will depend on the fleet's total entered value as at 1 January 2015. Higher gross rates apply for cruise ships and passenger ferries.
The Directors recognise the importance of the level of the Club's reserves, which were $103 million at the end of 2013. The Club's sound financial foundations meant it was able to retain more risk in 2014, so that it could continue to provide cover in AP Areas such as the Gulf of Aden and the Indian Ocean at competitive rates, in spite of a number of Somali piracy claims in previous years. The 2014 operating result is expected to be positive, further strengthening the Club's position. To ensure the Club's rates remain competitive, reinsurance is in place to protect the Association's reserves.
In 2015, the Club will also continue to offer Members the option of both contraband cover and war risks loss of hire insurance, including loss of hire caused by acts of piracy. Details are also set out in Circular C2 2014.