The terms for Hull Insurance for 2006 are outlined in this circular. The Association will continue the process of streamlining the cover to ensure that comprehensive insurance covers are available to suit the needs of Members.

Summary

• The Association saw a small deficit in the hull class in 2004. The claims pattern was different from the preceding years in that the frequency of claims was lower whereas severity was higher. Despite remedial actions taken, the year of 2005 shows an escalation of last year. Even though the total number of claims is down, the frequency has increased for claims exceeding 2 MUSD. The escalation of high level claims is believed to be a combination of random and underlying structual aspects such as higher steel prices, repair cost etc. The goal is to keep premiums on an adequate level to maintain solvency and to balance claims. For the coming year the premium has to be increased and adjusted to reflect the exposure for the increased number of serious losses that have to be spread across the membership. Consideration will be taken to individual members risk exposure under applicable insurance conditions including, but not limited to, necessary increases in deductible levels.
• Records will reflect a five year period and will be based on the database Swedish Club OnLine “SCOL´” available to Members and their Brokers via the Association’s extranet.
• Each Member, or his Broker, will be contacted individually for renewal discussions.

It shall further be noted:

Hull Premium
The Premium shall be based on i.a. the type of vessel, management, value, risk exposure and loss records, in addition to what is stated above. In particular, focus will be to ensure that premium fully covers the risk exposure.

Procedures for Payment of Premium
Debit notes will be mailed to Members/Brokers one month prior to due date in order to provide ample time for arranging payment. To speed up the transfer of funds it is recommended to use an electronic payment order. Cross-border payments should always be effected with relevant IBAN, the Association’s bank name, address and SWIFT address (Bank-/BIC-code) being HANDSESS to ensure an easy and quick settlement. The debit note reference number (i.e. invoice number) should always be stated on the payment order, enabling the Association’s credit control officers to quickly trace the payment.
At renewals and risk attachments, debit notes for the first instalment might not have been received prior to due date. In such cases Members are requested to transfer the outstanding amount prior to receiving the debit note.
In the event that premiums are not received by the Association on the due date, interest calculated at 1% per month will be charged from the day following the due date. The interest will be debited per calendar quarters.
Should premiums still be outstanding 30 days after the due date, the Association may issue a notice of cancellation to the Member and relevant Mortgagees. (Reference is also made to “Premium Payment and Cancellation Clause”, (A.5))
All premiums are due on the due dates.

Renewals
Statistical records used for the 2006 renewals will reflect the results for the years 2000, 2001, 2002, 2003 and 2004. Claims development for 2005, if adverse, will also be taken into consideration when deciding renewal terms. Records are only presented through the Association’s extranet, Swedish Club OnLine (see next page).

SCOL (Swedish Club OnLine)
SCOL provides access for Members and their Brokers to the database which details the claims summary and records (five years’ data available). In addition to claims information, insurance data of vessels entered is available. Furthermore, a benchmarking facility in relation to claims types is available. Information is updated every night. Comments on claims and reserves are answered by each Team.
Members and Brokers, who have not yet applied for SCOL are invited to send their registration form to the Association to obtain their unique password. For more information please visit our website www.swedishclub.com.

Claims Lead
The Association shall at all times have claims lead unless otherwise agreed in writing. For all policies not covering 100%, where the Association has claims lead, the “Swedish Club Claims Lead Clause” (A.4) shall apply.

Members electing to place a part of the cover elsewhere are recommended to arrange for procedures to provide counter security to the satisfaction of the Association in cases when the Association decides to issue a Guarantee or a Letter of Undertaking for the full amount.

Claims – Adjustments – Adjusters
Claims are to be reported to the Association immediately by the Member. Emergency, office and private telephone, fax and other contact details are listed in the annual booklet “List of Correspondents” and available on the website. All claims are adjusted by the Association’s in-house Adjusters. Adjusters for General Average shall be appointed in co-operation with the Association.

Lay-up returns
Application for lay-up returns shall be made in writing latest 30 days after expiry of the insurance period or absolutely latest by January 31st the year after the lay-up commenced. Returns are not granted if compensation for total loss has been paid or if claims have been incurred in excess of double the annual premium. Returns are granted for Hull and Machinery insurance only. Returns are credited the Member at the expiry of the policy year. The Association retain the right to individually assess any lay-up. A lay-up return application form is enclosed.

Club Clauses
Policies for 2006 shall contain: “Fleet Clause” (A..1), “Classification Clause” (A.2), “Premium Payment and Cancellation Clause” (A.5), “Tender Clause” (A.6), “Condition Survey Clause” (A.7), “Time Bar of Claims Clause” (A.8), “Assignment Clause” (A.9), “Uniform Interest Rate Clause” (A.11), “Radioactive Contamination, Chemical, Biological, Biochemical and Electromagnetic Weapons Exclusion Clause” (C.1.3) (LSW 370, 2003-11-10), “Institute Cyber Attack Exclusion Clause” (C.1.3.1) (LSW 380, 2003-11-10) and “US Terrorism Risk Insurance Act Clause (TRIA Clause)” 2003-01-01 (C.9), all as attached.
All Swedish flagged vessels are also subject to “The Swedish Club Outbreak of War Clause (Hulls, etc.)” (W.7.1), as attached.
Yours sincerely, The Swedish Club Frans Malmros