2013 Chairman’s Statement
The good news to report on the last policy year of 2012/13 is an improvement in both the level of claims and the investment return.
ITIC continues to return premium to its Members via the continuity credit at renewal. The amount paid in 2012/13 was US$3.3m. Since the continuity credit payments began 18 years ago, I am pleased to report that more than US$72m has been returned to you, the Members.
The improved claim and investment returns allowed the Board, at its meeting in March 2013, to retain the level of continuity credit for one year policies at 2.5% and to increase the level of credit on two year policies from 5% to 7.5%; this will apply from June 2013 onwards.
The economic climate worldwide continues to remain difficult although there are increasing signs of improvement. In any recession, professional indemnity insurers tend to see a sharp increase in both the number and value of claims presented and this happened to ITIC in the years 2009 to 2011. As a result, a number of significant claims fell into the reinsurance layer relating to this period pushing up the cost of the reinsurance programme. This has meant that the Club pays both a relatively higher cost for its reinsurance and also retains more of each claim before its falls into reinsurance. It is, therefore, essential that the Club continues to act prudently on both its pricing and its appetite for risk.
ITIC has maintained its premium income and continues to retain approximately 95% of its Members at renewal each year, which is a very high retention level.
It is important to maintain the level of our free reserves and I am pleased to advise that the reserves have increased from US$78.4m to US$91.3m. Solvency II, the new regulatory regime with which all insurers within the EU will have to comply by 1st January 2016, will also have an impact on future capital requirements of the business. However, it is pleasing to note that the Club’s current level of free reserves is higher than any present or anticipated regulatory requirement.
The investment return for 2012/13 was 7.5% which will help to fund the increased levels of continuity credit agreed by your Board for 2013/14. The Club’s reserves are invested in a wide portfolio of assets designed to match any currency exposure that the Club may have to existing claims (which are mostly in US dollars), whilst also balancing the ability to yield a return based on an acceptable level of risk.
The Club offers valuable support to its Members with their claims, debt collections (where applicable) and also in providing general or loss prevention advice on a wide range of issues both directly and via the ITIC website at www.itic-insure.com. The accounts and financial highlights for the period from 1st June 2012 to 31st May 2013 are available on this website.
In common with previous years, the Board has decided to close the 2011/12 policy year, meaning that no additional premium can be requested from Members for this or any earlier year. The only full year that remains open is 2012/13. The Club has never requested additional premium for any policy year.
Looking forward, ITIC will continue to provide competitively priced professional indemnity insurance (and related products) with loss prevention advice to businesses servicing the marine and transport industry through a mutual insurance company which maintains strong reserves and is supported by at least “A” rated security, sound risk management, quality service and competent staff.
International Transport Intermediaries Club Ltd