Chairman’s statement 2022
I can report that in its 30th financial year, ITIC has produced a strong surplus. ITIC, combined with its mutual reinsurer TIMIA, returned a US$8m surplus for the year to 31st May 2022 (“2021/22”) after paying US$14.2m for the cost of the continuity credit. This follows the US$13.3m credit paid in the previous year.
The continuity credit is paid to renewing members and it effectively reduces the cost of your insurance. Your board, at its meeting in March 2022, reviewed the level of ITIC’s free reserves and the volatile investment markets in light of the Russian invasion of Ukraine.
The board decided that, as the free reserves were still well above the amount required for ITIC’s solvency requirement, they were going to pay a continuity credit for the 28th consecutive year for all renewals in the 2022/23 year.
- For one year policies, the credit was 15% of the premium.
- For two year policies, the credit was 25% for year one with at least a 15% promised credit for year two.
- Those in the second year of a policy, begun in 2021/22, will receive a credit of 25%, which was substantially more than the original 15% promised by the board at its meeting in March 2021.
Your board considers the payment of such continuity credits to be a very important benefit of being covered by a mutual insurer, even more so in these difficult times. Since the continuity credit payments began 27 years ago, I am pleased to report that more than US$174.2m has been returned to you, the members.
The risk for all claims up to US$1.0m continues to be retained by ITIC, as well as an additional two retentions in excess of the primary US$1.0m level and one retention excess of US$2.0m. As the marine insurance market has been a “hard” market for the past eighteen months to two years, ITIC paid 12.5% more for its reinsurance in addition to the adjustment for additional premium written throughout the year. We are comfortable that the reinsurance in place reduces the risks of large claims to an acceptable level at a reasonable cost, even with this increase.
ITIC’s annual premium increased in 2021/22 by 9.8% and so ITIC has now had three good years of growth. In past years, premium has remained static largely because of continued consolidation in the transport services market so it is pleasing to see such strong growth. ITIC continues to retain approximately 96% of its members at renewal each year, which is a very high retention rate.
The insurance, claims, contractual advice and practical help that we can provide through our staff in London to members, advisers, brokers and introducers around the world, continues to set us apart. I am pleased to be writing this statement at a time when, for most of the world, the lockdowns of the past two years are becoming a distant memory although of course in some parts of the world restrictions remain in place. ITIC staff are enjoying getting out and about again and reconnecting with members, brokers and other partners around the world. Nevertheless, ITIC will continue to produce regular webinars and podcasts as these have enabled ITIC to reach a widespread international audience.
I would like to thank those members and insurance brokers who took part in our 2022 member and broker survey. The results further endorsed my comments above. ITIC is viewed very positively by members and brokers alike. The conclusion was that strong finances, the peerless levels of service, expertise and responsiveness make ITIC a very easy choice of insurer. Members and brokers also commented that the interpersonal, genuinely warm relationships, further strengthen ITIC’s service culture and its ability to deal with issues quickly and professionally. Loss-prevention case-studies and publications are well thought of and the webinar programme had proved to be both popular and useful.
It is important for ITIC to maintain its level of free reserves both for solvency reasons and to allow the levels of continuity credits to be paid to the membership. I am pleased to advise that the combined free reserves of ITIC and TIMIA have increased from US$213.9m as at 31st May 2021 to US$221.9m as at 31st May 2022.
In common with past years, the board decided to close the preceding policy year, meaning that no additional premium can be requested from members for the 2020/21 policy year or any earlier year. The only full year that remains open is 2021/22. ITIC has never requested additional premium for any policy year.
ITIC reports fully to Solvency II standards and is regulated by the Prudential Regulation Authority. Details of ITIC’s solvency position can be found in the Solvency and Financial Condition Report, which is available on the ITIC website: https://www.itic-insure.com/about-itic/solvency-ii-reporting/
ITIC is committed to consistently providing competitively priced professional indemnity insurance (and related insurance covers) with valuable, high quality loss prevention advice to businesses servicing the marine, aviation, rail and general transport industry through a mutual insurance company supported by at least “A-” rated security from its external reinsurers. The focus will continue to be on maintaining strong reserves and the provision of quality service and sound risk management advice by a highly competent staff.
The accounts and financial highlights for the 2021/22 year will be available on the website (www.itic-insure.com) before the AGM on 22nd September 2022.
International Transport Intermediaries Club Ltd