No.9 2026/27 - Class 1 (P&I) and Class 2 (FD&D) Renewals – 2027/2028
At their meeting on 4th November, the Board reviewed the latest Class 1 and Class 2 performance together with the Club’s financial position and agreed the approach to renewals for the 2027/2028 Policy Year.
The Board noted that:
- The incurred cost of the Club’s own claims for the 2026/27 Policy Year is higher than initially forecast.
- The incurred cost of current Policy Year claims on the International Group Pool at the 8 month stage is lower than budgeted.
- Back year claims experience has been favourable for both the Club’s own claims and its share of International Group Pool claims.
- The combined ratio is forecast to be around 100% at year end.
- The financial markets are currently subject to significant volatility. Whilst the investment return is expected to remain positive at year-end, it is forecast to be lower than that achieved in 2026/27.
- The Free Reserve is forecast to increase to USD 390 million.
- Capital is expected to further strengthen at February 2027, to a Solvency Ratio around 200%.
- The Club’s total premium is expected to be in excess of USD 450m for the year.
- During 2026, the Club was awarded an A- rating with stable outlook by S&P and has also had its A- rating with stable outlook re-affirmed by AM Best.
The Board continues to target a combined ratio, on a three-year rolling average basis, better than 100%. While this was achieved at the last two financial year-ends, the Board expects challenging conditions across the portfolio with churn likely to weigh on premium levels and inflationary pressures persisting on claims, reinsurance and operating costs. Against this backdrop, disciplined underwriting and careful risk selection remain central to sustaining the recent strong operating performance of the Club and the Board therefore reached the conclusion that a premium rise is necessary to address these challenges and accordingly, agreed the following:
Class 1 (P&I) Owned Mutual
- For Class 1 entries a 5% standard surcharge has been set to apply to all mutual premium rates.
- For Members whose records are adverse, additional action will be taken where necessary with rates and terms adjusted as appropriate to reflect record and/or risk exposure.
- A Release Call of 15% has been set for the 2027/28 Policy Year. No change has been made to the calling structure or instalments, i.e. an estimated total mutual call shall be payable in four equal instalments, each of 25% of the total mutual call during the Policy Year.
- In addition, following usual practice, rates will be adjusted to reflect any changes in the cost of the International Group Reinsurance Programme.
Class 2 (FD&D) Owned Mutual
The Club’s Defence Class continues to perform well but due to inflationary pressures, the Board decided as follows:
- For Class 2 entries a 5% standard surcharge has been set to apply to all mutual premium rates.
- For Class 2 entries, the minimum deductible will be adjusted to USD 7,500 and 25% of the claim and the maximum deductible adjusted to USD 100,000.
- As
with Class 1, an estimated total mutual call shall be payable in four
equal instalments, each of 25% of the total mutual call during the Policy
Year. A release call of 15% shall apply.
Class 1 (P&I) and Class 2 (FD&D) Non-Mutual Covers
Whilst no standard surcharge has been set by the Board for non-mutual covers, premium and terms will be adjusted as appropriate to reflect individual assureds’ record and/or risk exposure, together with any increased reinsurance cost.
No change will be made to current premium structure which shall continue to be payable in up to four equal instalments during the Policy Year.
Policy Years and Release Calls
In setting the level of Release Call percentages for each open Policy Year for Class 1 and Class 2, the Board has taken into account the Club’s improved overall capital position and all the factors that are set out in Clause 8 of the International Group Agreement.
Class 1 (P&I)
2024/25 – Release call reduced to 5% of estimated total mutual call.
2025/26 – Release call reduced to 10% of the estimated total mutual call.
2026/27 – Release call maintained at 15% of the estimated total mutual call.
Class 2 (FD&D)
2024/25 – Release call reduced to 5% of estimated total mutual call.
2025/26 – Release call reduced to 10% of the estimated total mutual call.
2026/27 – Release call maintained at 15% of the estimated total mutual call.
International Group reinsurance rates
A further Notice to Members will be issued later in the year to detail any changes in the Group reinsurance rates, scope of cover and limits.
Yours faithfully,
For: West of England Insurance Services (Luxembourg) S.A.
(As Managers)