NOVEMBER 21, 2025 CIRCULAR NO. 26/25 TO MEMBERS OF THE ASSOCIATION Dear Member:
BACKGROUND TO THE 2026 AMERICAN CLUB RENEWAL. DEVELOPMENT OF CLOSED AND OPEN POLICY YEARS. REQUIREMENTS FOR THE 2026 POLICY YEAR.
The Board of Directors met in New York yesterday to review the current market conditions as well as specific factors as they relate to the financial performance of the American Club. This Circular advises on the decisions reached
Background to the 2026 American Club renewal
As the 2025-2026 policy year progresses, the impact of large claims arising in the Pool as has been experienced over the past eighteen months remains a concern for the Club and indeed the broader P&I market. The risk landscape of elevated claims costs which was identified several years ago has proven to be the new norm. The Club’s dynamic approach to risk assessment has played a key role in managing the impact on direct claims, while the volatility with respect to larger casualties, especially at Pool level, continues to be challenging.
Development of closed and open policy years
Closed Policy Years
The 2022-2023 policy closure required a modest deficit absorption into the contingency fund, while favorable development of claims within other closed policy years, in addition to allocation of positive investment performance, led to overall strengthening of the fund since year-end December 2024
Open Policy Years 2023-2024 This policy year remains in a positive surplus position as of September 2025. The release call margin for both the P&I and FD&D classes will remain at 15% over and above the total estimated premium for the year with an aim to close this policy year in the first half of the 2026 calendar year. 2024-2025 The 2024-2025 policy year was negatively impacted by reduced premium income, elevated reinsurance costs, two direct claims which have been notified to the Pool, and most significantly, the extraordinarily high level of claims assumed from the International Group of P&I Clubs, with the year marking the worst record in history for the Pool.While the policy year deficit will eventually benefit from the allocation of investment income, and carries conservative levels of IBNR with eighteen months of further development through to 2027, the Board has decided that, in line with prudent practices and regulatory responsibilities, the current deficit position warrants the release call margin for both the P&I and FD&D classes to be set at 35% over and above the total estimated premium for the year.
2025-2026 The 2025-2026 policy year is in its ninth month of development, and while direct claims experienced to date are within projections, with the most difficult weather period still ahead, it is premature to make predictions. The level of Pool claims is currently equivalent to the full 2023-2024 policy year declared levels with three months still ahead in this policy year. Encouragingly, premium is at a higher level than 2023 and 2024 with reduced exposure on a GT basis. The release call margin for both the P&I and FD&D classes will remain at 20% over and above the total estimated premium for the year.
Release calls The current release call margins for open years are set out above. As to the factors supporting these decisions, the following are taken into account: premium risk, catastrophe risk, reserve risk, market risk and counterparty default risk, as well as the exposure of the Club generally to the wide variety of operational risks which, over time, it needs to consider in determining both its basic premium and, more particularly, release call needs in regard to open policy years.
Premium and related requirements for the 2026 policy year While premium income growth has continued to strengthen since inception of the current policy year, inflationary pressure and persistent volatility in claims, especially at Pool level, dictate a continuing prudent approach in rating strategy with an aim to secure financial resilience.
Over recent renewals, the Club’s policy has been to employ a Member-specific approach reflecting individual assessment of records, trade and intrinsic risk profiles for treatment of pricing and terms of cover.
Within this context, the Board has mandated the implementation for 2026 of a year-on-year targeted overall increase in the pricing of risk of 8% on expiring rates for all mutual classes of the Club’s business.
Accordingly, the Board has instructed the Managers to apply the following policy for the renewal of Members’ entries for the 2026 policy year.
Mutual Protection and Indemnity (P&I) Insurance
All expiring estimated total premium to have no standardized, or general, increase, subject to an overall target increase of 8%.
The component of premium represented by the Club’s International Group reinsurance arrangements for 2026 to be adjusted separately and additionally.
Premium will be defined as estimated total premium for 2026.
All estimated total premium will be debited in four equal installments due March 20, June 20, September 20 and December 20, 2026.
Premium (call) to release will be charged as an additional margin of 20% of estimated total premium for the year
Mutual Freight, Demurrage and Defense (FD&D) Insurance
All expiring estimated total premium to have no standardized, or general, increase, subject to an overall target increase of 8%.
Premium will be defined as estimated total premium for 2026.
All estimated total premium will be debited in two equal installments due March 20 and August 20, 2026.
Premium (call) to release will be charged as an additional margin of 20% of estimated total premium for the year
Fixed Premium Protection and Indemnity and Damage to Hull (DTH) Insurance All fixed premium P&I and DTH entries (e.g., those for charterers’ risks) to be subject to an individualized rate assessment.
Fixed Premium Freight, Demurrage and Defense (FD&D) Insurance All fixed premium FD&D entries (e.g., those for charterers’ risks) to be subject to an individualized rate assessment.
In addition, the Board has decided that, for 2026, for all classes of business, all deductibles of US$25,000 or less, per claim, be increased by US$1,000 in each instance.
Subject to these general conditions, and as discussed above, Members’ premium rates and terms of entry for 2026 will be assessed by reference to their own particular circumstances, including their loss records, vessel-type, trade and regional factors, as well as other relevant aspects as determined by data-driven analysis, in addition to the consideration of Members’ individual risk profiles, subject to which further adjustments may be made as appropriate.
Furthermore, it will also be a condition for renewal that: – all premiums and other sums due to the Club be fully paid up-to-date prior to February 20, 2026, as a condition of continuing cover; and – all outstanding survey etc. requirements be completed prior to February 20, 2026, as a condition of continuing cover.
The Board and Managers express their sincere gratitude to all Members for their support over the years. Looking ahead, the Board and Managers reaffirm their unwavering commitment to providing exceptional service. They remain diligent in safeguarding the Club’s financial resilience, ensuring that Members can rely on a robust and dependable solutions provider well into the future.
The Managers will be in contact with individual Members with their proposals for renewal over the forthcoming weeks. If, in the meantime, any Members should require clarification in regard to the above, or generally, the Managers will be pleased to respond.
Yours faithfully,
Dorothea Ioannou, CEO Shipowners Claims Bureau, Inc., Managers for THE AMERICAN CLUB
