ITIC Members might be forgiven for thinking that their Club is controlled by the managers. Underwriting quotes, claims payments and publications are all the responsibility of the managers; as indeed is the successful operation of ITIC. The Managers are, however, themselves responsible to ITIC’s board of directors and it is the Directors who make the important policy decisions, not the managers. The directors of ITIC meet twice a year and held their last meeing in Paris in March. A review of the agenda for that meeting illustrates the range of subjects that are regularly considered by the Board.
Matters arising from the previous meeting included reports by the managers on the Year 2000 problem and a claim which the directors had previously considered. The overwhelming majority of claims are settled promptly and amicably, but very occasionally the managers have to take the view that the claim is not payable under the Rules of the Club. In such a case the Member is entitled to request that the merits of the claim be considered by his peers, the directors.
ITIC’s reinsurance programme is one of the most fundamental aspects of the Club’s long term security. It currently protects the Club from claims in excess of US$150,000 and the premium represents a substantial cost for the club. The financial strength, or security, of the Lloyd’s syndicates and insurance companies providing the cover is also of great importance. The directors considered a verbal report from the Club’s reinsurance brokers and, after discussion, approved the renewal of the Club’s reinsurance policies for a period of two years.
The next item on the agenda required the directors to consider the terms on which Members should be offered renewal of their insurance with ITIC. As the majority of Members renew on 1st June, it was therefore appropriate for the Board to consider this question at their March meeting. The Club is in a strong financial position and has enjoyed a substantial investment income in recent years. However, ITIC is subject to EU regulation so far as its financial strength is concerned, and the managers reported an increase in both the number and value of claims for the current policy year.
The directors were also able to draw on their own knowledge and experience of the current state of the shipping market and the resulting financial pressures on the Club’s membership. Taking all these factors into account, the directors decided that the continuity credit offered to renewing Members should be increased to a maximum of 20% as compared to 15% last year. The number of Members eligible for the maximum benefit was also increased in comparison with last year.
The formal closure of a policy year is a significant event in that it confirms both that no supplementary call will be made for that year and that the Club’s financial affairs are being well managed. Only the directors can elect to close a policy year and on this occasion they authorised the closure of the 1996 policy year with the surplus being transferred to the general reserve.
Claims represent a very important part of the Club’s business and at each board meeting the directors receive a report on the ten largest claims that have been closed since the previous meeting. They also receive a report on the development of the paid and estimated claims for the past four years.
The financial health of any business is of importance to its directors and the ITIC directors received a financial report on each of the Club’s open policy years.
The majority of board meeting agendas include an item of general interest to the membership of ITIC, and on this occasion the European Commission and British Government’s “Quality Shipping Campaign” was debated. The conclusion of the board meeting was followed by an evening reception at the Pré Catelan located in a pleasantly wooded area of Paris. Invitations had been sent to all ITIC Members in France and their insurance brokers, together with other leading figures in the French shipping industry. A large number attended and were welcomed, in French, by the Club’s chairman, Mr Paul Vogt.
“The Club is in a strong financial position and has enjoyed a substantial investment income in recent years”