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CircularsNews
November 2014

International Group P&I Clubs 2015/16 Policy Year Strategies - 2nd circular

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

‍https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

‍https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

‍https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en‍

Dear Sir/Madam,

Further to our following circular early November, please note more clubs have now announced their policies for 2015/16 year. So we issue hereby a second general circular displaying all of those announced so far.  Recent announcement are from West of England, North of England and Standard Club.  All of the circulars are attached for a detailed review.

Degerli Müsterimiz, Sayin Ilgili,

Uluslararasi Grup Kluplerinin yeni poliçe yili için belirledigi stratejiler asagidaki tablomuzda genel hatlari ile özetlenmeye çalisilmistir. Ayrica Kluplerin münferit sirküleri daha fazla detayli bilgi için ekte yer almaktadir.

Önceki yillarda oldugu gibi “group excess reinsurance” programindaki bir onceki yila gore olusan masraf farkinin yeni dönem icin anlasilan primlere ilave edilmesi planlanmistir. (Bu uygulamanin istisnai oldugu klup/ler için tabloya bakiniz.) Reasurans anlasmasi henuz belli olmamis olup üyelerin hasar performansina gore ilave prim ve/veya muafiyet artis uygulamasi olabilir.

Kluplerin sirkülerlerine bakildiginda  bu sene genel prim artislarinin tek haneli hatta bazi kluplerde hiç olmadigi seklinde ilimli bir tablo ortaya çikmaktadir. Bu genellikle asagida sebeplerden kaynaklanmaktadir.

-          Yatirim gelirlerinin beklenen seviyelerde seyretmesi ve prim üretim / hasar oranlarinin genelde dengelenmis olmasi.

-          2013/14 yilinda havuz kluplerince paylasilan ve usd 9 milyonu asan hasarlarin sayisi (pool claims) 17 iken su ana kadar 2014 /15 yilina dair rapor edilen hasarlarin henüz 9 adet olmasi.

Diger kluplerin yeni döneme dair sirküleri yayinlandiginda ayrica iletecegiz.

Dear Sirs,

The following are 2015 / 16 policy year requirements by the International Group Clubs. For detailed information please see attached zip file in which individual circulars are kept.

It is planned that the agreed rates will further be adjusted to reflect any changes in the cost of the International Group Excess Loss Reinsurance Programme – which is not known at the moment. (Please see the table for any exceptions.) Further adjustments on premiums and/or deductibles may apply based on member's general performance.

Looked at all clubs’ circulars, following points surface as to reasons for the general increase of premiums and deductibles.

- moderate investment results and generally successful underwriting results,

-       - 9 pool claims (claims exceeding $9 million club retention) so far in 2014/15 policy year compared to 17 (total value $302 million) in 2014/15.

We will further let you know announcements of other clubs once available.

2015 / 16

P&I

NOTES

American

Britannia

+2.5%

Deductibles as expiry.

Gard

+2.5%

Deductibles below the standard deductibles for P&I in Rules Appendix V, para 2 to be increased with USD1,000 or up to standard deductible whichever the lowest.

Japan

London

North of England

+4.5%

Mandatory minimum premium rise is 2.5%. Deductibles: all crew and cargo deductibles below $25,000 will be increased by $2,000

Shipowners

0%

Deductibles as expiry and group reinsurance cost to be absorbed by Club

Skuld

No general increase and members to be individually assessed.

Standard Europe

+5%

Deductibles also to apply to correspondent/survey and legal fees and all deductibles to increase by 10%. Where a deductible is lower than $10,000 a mandatory increase of $1,000.

Standard Europe(London)

Steamship

0%

Deductibles as expiry

Swedish

UK P&I

+6.5%

standard deductible will increase from USD 8,500 to USD 10,000 per event including fees and expenses.

West Of England

+2.5%

Deductibles to increase by 10% or $1,000 whichever higher subject to a maximum increase of $2,000.

2015 / 16

FDD

NOTES

American

Britannia

0%

Deductibles as expiry.

Gard

+10%

Deductibles as expiry.

Japan

London

North of England

+2.5%

Deductibles as expiry.

Shipowners'

0%

Deductibles as expiry.

Skuld

Standard Europe

+5%

Deductibles as expiry.

Standard Europe (London)

Steamship

0%

Deductibles as expiry.

Swedish

UK Defence

West of England

0%

Deductibles as expiry.

‍

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