21 December 2023
P&I Reinsurance Arrangements for the 2024 Policy Year
The International Group has announced the details of the forthcoming 2024-25 reinsurance programme and its structure.
Structurally, the main programme is largely unchanged with the clubs individually retaining the first USD10M of any claim and the pool being involved in the layer USD90M excess of USD10M. This pool involvement is in two layers – a lower pool of USD40M excess of USD10M and an upper pool of USD50M excess of USD50M. Multi-cellular captive, Hydra Insurance Company Limited, continues to reinsure the same elements of the pool (USD70M excess USD20M).
Above the pooling limit, the structure remains the same, except from the structural change relating to the treatment of COVID-19 and Malicious Cyber risk.
Coverage Structure
Layer 1 continues at USD650M excess USD100M and is 25% placed privately and 75% placed in the open market, the latter participation remaining subject to a Hydra Annual Aggregate Deductible of USD107.1M.
The subsequent layers are USD750M excess of USD750M and USD600M excess of USD1.5B. The Collective Overspill layer USD1B excess of USD2.1B is also unchanged and any loss in excess of this reverts to pooling.
As regards COVID-19 risks and Malicious Cyber risks, the two towers have been split above USD750M such that each risk category has independent aggregate limits of USD1.35B above USD750M (in two layers). In the previous year, these risks were combined in determining the aggregate limits.
The various sub-limits for oil pollution, crew and passenger risks are unchanged. Excess war cover remains subject to territorial exclusions connected with the Russia/Ukraine conflict, but the group has purchased USD80M aggregated reinsurance against these exclusions.
2024/25 Rates
The rates recharged to members have been adjusted to reflect the more benign claims experience in the reinsurance programme and the upper reaches of the pool, which is funded via Hydra.
As a result, rates have been reduced but some vessel classes’ benefit more than others, reflecting the improving claims experience seen for persistent oil carriers and cruise vessels. This is the third year in a row that these vessel types have been afforded better than average rate changes.
Charterers’ rates are unchanged from the prior year.
The following graph show the historic changes in the cost of the programme since 1988, but readers should bear in mind that the underlying pool retention has increased over this period.
Passenger risks were split out from dry in 1995 and container rates were split from dry in 2021. At present there do not seem to be any plans to establish a wider range of vessel categories.
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