The International Group of P&I Clubs (IGP&I), a provider of protection and indemnity (P&I) insurance to the global shipping industry, has largely maintained the structure of its reinsurance program during its renewal for the 2020/21 year.
IGP&I decided to renew its program without significant changes this year, following a number of adjustments to pricing and structure in the 2019/20 renewal last year.
The Group explained that the loss experience of its General Excess of Loss and Collective Overspill (GXL) Program remains acceptable to reinsurers, and that its reinsurance captive, Hydra, continues to give positive results through its loss retention strategy.
These factors have enabled IGP&I to renew the program with rates for shipowners remaining flat cross all vessel categories, it said.
Individual Club retention (ICR) remains unchanged for the 2020/21 policy year atS$10 million, as does the structure of the pool above that and the attachment point for the GXL program. The further ICR of 7.5% in the upper layer of the Pool remains unchanged.
There was also a modest adjustment made to the program, with the two expiring 5% private placements in the $1 billion excess of $100 million layer being replaced by two new 10% multi-year private placements in the first layer.
This will therefore see three 10% private placements for the 2020/21 policy year, with the 70% balance placed in the market.
Otherwise the $100 million AAD (retained by Hydra) within the 70% market share of the first layer of the program (from $100 million to $750 million) remains.
The second layer will cover $750 million to $1.5 billion and the third layer from $1.5 billion to $2.1 billion. There is no change to the Collective Overspill layer, which provides $1 billion of cover in excess of $2.1 billion.
“All shipowners will be aware of the hardening reinsurance market and upward pressure on premiums. Despite this, the longevity and relative stability of the GXL programme has enabled the Group to achieve renewal for 2020/21 on expiring rates for shipowners,” said Mike Hall, Chairman of the International Group Reinsurance subcommittee
“Of additional benefit, the US$2 billion excess of US$100 million placed in the commercial market has been confirmed for two years. This will help provide a degree of reinsurance pricing stability for the next two years whilst maintaining flexibility to fund claims within the Pool,” Hall explained.
“Structurally, the GXL programme is relatively unchanged, with the emphasis having been on continuity and respecting the long term relationships that the Group has built up with many of the world’s leading reinsurers.”
