The International Group of P&I Clubs has now completed its pooling and GXL reinsurance contract structure for 2021, after securing a two-year placement on layers 1-3 of the programme in 2020.
In light of the two-year placement completed last year, the focus this year has been on the Group’s Collective Overspill layer which provides coverage for claims USD 1 billion excess of USD 2.1 billion.
The Group notes that against the backdrop of a hardening reinsurance market, it secured terms only slightly above expiring rates for shipowners.
In terms of structure, the GXL programme remains unchanged, with the Group placing an emphasis on continuity and respecting the long-term relationships it has established with many world leading reinsurers.
“The Group’s decision to renew the majority of its programme last year for two years has provided our Members with the benefits of price stability and continuity of cover at a time when the reinsurance market is in a state of flux. We are grateful to our reinsurers for their continued support,” said Mike Hall, Chairman of the International Group’s Reinsurance subcommittee.
“The introduction of a fifth category of vessel type and modest rate changes applied as a consequence, allow the rate charged to each type of vessel to continue to fairly reflect the loss experience that they have brought to the Group’s reinsurance arrangements,” he added.
As noted by the Group, its reinsurance captive Hydra continues to support the Group via its risk retention at the primary part of the Group’s reinsurance structure. The Group adds that its continued strategy of placing a section of the reinsurance programme on a stand-alone basis via the use of private placements has continued to give shipowners increased stability in a year hit by volatility as a result of the COVID-19 pandemic.
All in all, these factors helped the Group achieve a satisfactory GXL reinsurance programme renewal result, with rates for shipowners rising by an average of 1.4% year-on-year.
For the 2021/2022 policy year, individual club retention remains unchanged at USD 10 million, as does the structure of the pool and the attachment point for the GXL programme.
A deeper look at the structure of the programme reveals that the three 10% private placements for the 2021/2022 policy year each have at least one more year to run, with the 70% balance of layer 1 placed in the reinsurance markets. Otherwise, explains the Group, the USD 100 million AAD (retained by its captive Hydra), within the 70% market share of layer 1 of the programme remains.
The second layer of the programme covers USD 750 million excess of USD 750 million and the third layer USD 600 million excess of USD 1.5 billion. Both the second and third layer of the programme are 100% placed in the markets.
Regarding the Collective Overspill layer, which has been the main focus this year, there is no change.