UK Defence Club post five per cent renewal increase

The UK Defence Club has decided on a general premium increase of only five per cent for the policy year beginning 20th February 2010.

The directors of the Club, known as the United Kingdom Freight Demurrage and Defence Association Limited and managed by Thomas Miller Defence Limited, agreed the measure at their meeting on November 5th.

In a circular to members, the directors recognise that the financial crisis continues to have a wide ranging impact on members and their business activities, with freight rates and business confidence remaining adversely affected. There has been a significant increase in maritime litigation and its costs, with members increasingly involved in disputes arising from early redeliveries, off-hire, sale and purchase and other matters. Further, substantial and expensive disputes arising from newbuilding contracts, including claims under refund guarantees, are becoming more prevalent.

The directors remain committed to Thomas Miller's Value for Money programme, aimed at better control of legal costs and the management of suppliers of legal services.

As usual, the Club's general increase will be applied to each member's current rating. If appropriate, further underwriting adjustments will be made to take account of individual members' loss records and other underwriting factors.

Given current market conditions, the Club will continue to meet the cost of Insurance Premium Tax for European Economic Area-based members.

Club Chairman Panos Laskaridis said that "although the Association, like many other providers of FD&D cover, has experienced a significant rise in claims, steps taken by the Directors in previous years to solidify the Association's financial position mean that it is able to withstand this increase in claims without resorting to significant rises in premium, unbudgeted calls or material alterations to underlying cover.

"In the light of business and economic conditions, members are facing a difficult time. Claims will undoubtedly increase so members need a Club which is financially strong and a cover that is cost effective and responsive to Members' needs. Given the general increases and changes that have been introduced by other FD&D providers, the Association offers much needed stability in difficult times. This, coupled with the service offered by the Managers, places the Association in a strong position looking forward. We always welcome approaches from non-members so the benefits as between the Association and other providers can be fully explored."

Note to editors: As the leading independent provider of FD&D cover to the maritime industry, the UK Defence Club provides legal expenses insurance to ship owners and operators. This variously involves advisory services on charterparties, newbuilding contracts, MOAs and other contracts; managing litigation in all jurisdictions and forums for dispute resolution; and managing relationships with law firms through its participation in Thomas Miller's Value for Money programme.

Typically, the cover extends to costs associated with bringing and defending proceedings relating to ship operation, security for those costs and investigative and other costs arising out of claims, including surveyors', experts' and arbitrators' fees. The types of disputes most commonly covered are hire and redelivery, newbuilding, sale and purchase, bunker contamination and port and berth safety.

The UK Defence Club's entries comprise over 3,300 merchant vessels from around the world. Some 37 per cent of owned tonnage is based in Greece with significant entries from the rest of Europe and Asia Pacific.

At 20th February 2009, the Club's free reserves and capital----the difference between total funds and claims reserves----stood at £19.9 million.

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