Charles Hume, Chief Executive of The Shipowners’ Club has taken the floor in the debate between traditional P&I mutual insurance providers and the recent plethora of those offering fixed premium cover.
In a recent blog, the head of the 160 year old Club that concentrates its expertise on specialist, generally smaller vessels, questions the staying power of those that are entering the market with a view to making a profit. “We hear a lot today about the players crowding into the fixed premium market, but how many of them are just that – players?” writes Hume, “How many really have an appetite for the long tail?”
Shipowners’ is in the P&I market exclusively and believes that the long-term nature of the claims profile in the sector requires an insurer that is committed to continuity of service and has a perennial record of financial stability.
Hume believes that the fixed premium offerings have been encouraged by recent good results in the smaller vessel sector but he questions: will 2015 follow suit? And more importantly, if the tail is longer: why would the fixed premium providers not switch to a better performing sector in the shorter term? P&I represents only a small part of their businesses.
Shipowners’ is proud of its long stable history and traditional mutual approach. As evidence Hume draws attention to the Club’s policy on claims, “We take a long term view of bad claims years, whether for individual Members or the Club as a whole, ensuring a Member’s fair contribution is assessed over time.”
With the uncomplicated tag “What you see is what you get, ” Hume justifies his Club’s no-nonsense approach to the market, “It is our policy to apply minimal general increases – in 2015 we will have none – the premiums we quote are inclusive of the Club’s reinsurance costs, and we have a stated policy of no additional calls and no release calls for those who pay a mutual premium. We don’t impose deductible increases either; we agree them with the Members and brokers.”