No.11 2024/25 - Class 1 (P&I) and Class 2 (FD&D) Renewals - 2025/2026
November 2024
At their meeting on 6 November, the Board reviewed the latest Class 1 and Class 2 performance together with the Club’s mid-year financial position and agreed the approach to renewals for the 2024/2025 Policy Year. The Board noted that:
- The incurred cost of the Club’s own claims for the 2024/25 Policy Year are higher than the positive experience of 2023/24 but remain within the initial forecast.
- Current Policy Year claims on the International Group Pool have increased after two years of benign experience, with eleven reported claims as at the end of October, with a noticeable increase in activity, albeit West’s exposure is mitigated by the Club’s own Pool performance, reflected in its current low Pool share.
- Back-year claims experience has been mixed, with projections having to be increased slightly.
- The combined ratio is forecast to be just over 100% at year end.
- The Club’s investment return at 20 October was 5.1%.
- The Free Reserve is forecast to increase to around USD 320m, with the investment return continuing to be supportive.
- Capital is expected to further increase at February 2025, to a Solvency Ratio in excess of 200%.
- The Club’s total premium is expected to be c. USD 350m for the year.
- The Club has had its A-rating with stable outlook re-affirmed by AM Best.
Despite the Club’s strengthened capital position, the Board recognised that premium is insufficient to meet expected future claims and operating costs as inflationary pressures continue. The Board is also mindful of the increased Pool activity so to ensure that the Club maintains its objective of breakeven underwriting the following has been decided:
Class 1 (P&I) Owned Mutual
- For Class 1 (P&I) entries a 5% standard surcharge has been set to apply to all mutual premium rates.
- For Members whose records are adverse, additional action will be taken where necessary with rates, deductibles and terms adjusted as appropriate to reflect record and/or risk exposure.
- A Release Call of 15% has been set for the 2025/26 Policy Year. No change has been made to the calling structure or instalments, i.e. an estimated total mutual call shall be payable in four equal instalments, each of 25% of the total mutual call during the Policy Year.
- In addition, following usual practice, rates will be adjusted to reflect any changes in the cost of the International Group Reinsurance Programme, whether up or down.
Class 2 (FD&D) Owned Mutual
The Club’s Defence Class continues to perform well and the Board decided as follows:
- For Class 2 (FD&D) entries no standard surcharge will apply.
- For Class 2 entries no change will be made to the deductible structure.
- As with Class 1, an estimated total mutual call shall be payable in four equal instalments, each of 25% of the total mutual call during the Policy Year. A release call of 15% shall apply.
Class 1 (P&I) and Class 2 (FD&D) Non-Mutual Covers
Whilst no standard surcharge has been set by the Board for non-mutual covers, premium and terms will be adjusted as appropriate to reflect individual assureds record and/or risk exposure, together with any increased reinsurance cost.
No change will be made to current premium structure which shall continue to be payable in up to four equal instalments during the Policy Year.
Policy Years and Release Calls
In setting the level of Release Call percentages for each open Policy Year for Class 1 and Class 2, the Board has taken into account the Club’s overall capital position and all the factors that are set out in Clause 8 of the International Group Agreement.
Class 1 (P&I)
2022/23 – Release call maintained at 7.5% of estimated total mutual call.
2023/24 – Release call maintained at 15% of the estimated total mutual call.
2024/25 – Release call maintained at 15% of the estimated total mutual call.
Class 2 (FD&D)
2021/22 – Release call maintained at 0% of the estimated total mutual call.
2022/23 – Release call maintained at 7.5% of the estimated total mutual call.
2023/24 – Release call maintained at 15% of the estimated total mutual call.
2024/25 – Release call maintained at 15% of the estimated total mutual call.
International Group reinsurance rates
A further Notice to Members will be issued later in the year to detail any changes in the Group reinsurance rates, scope of cover and limits.
Yours faithfully,
For: West of England Insurance Services (Luxembourg) S.A.
(As Managers)