TSC Annual Report 2024 final - Flipbook - Page 59
Notes - Financial statements
6% of vessels were exposed to three insurance classes,
10% to two classes and 84% to one class.
The weighted average duration for claims outstanding net of
reinsurance is 2.6 (2.6) years.
Reserving risk pertains to the risk associated with provisions
that are made to cover future claims. The provision for
unearned premiums must give consideration to the variation
in risk exposure during an insurance period, such as seasonal
variations in claims frequency and scope of claims.
Provisions for incurred and reported claims are based on
individual assessments of each claim using the available
information. Claims reserves must reflect the total liability,
including claims handling costs, expected claims inflation
and impact from currency fluctuations.
For Incurred But Not Reported claims (IBNR), statistical
methods based on experience of the number and extent of
claims in prior years are used.
The table below shows the development of claims, net,
which means how the originally determined claim amount
at the end of each respective reporting year has developed
through 31 December 2024.
Counterparty risk
Reinsurance protection is crucial to the Club’s success.
Risks can arise from an insuf昀椀cient or erroneous level of
protection. The reinsurance department is responsible
for procurement, and they are tasked with optimising
insurance costs in relation to risk, results, volatility and
capital requirements. Essential to the management of
these risks is a reliable assessment of the probabilities
and expected outcomes.
The Club has had a consistent reinsurance strategy for
many years. For Marine, Energy and FD&D, coverage is
obtained directly via the Club’s long-term relationships
with leading reinsurance companies. For P&I, the Club
collaborates with the International Group of P&I Clubs,
where claim costs between USD 10 million and USD 100
million are shared (the Pooling Agreement). To supplement
this, reinsurance protection up to USD 3.1 million (Excess
reinsurance programme) is purchased.
Parts of the pool and reinsurance protection are covered
by Hydra Insurance Company Limited (Bermuda), which is
owned by the Group’s 12 members. Hydra is a protected
cell company, which means that the assets and liabilities
in each cell are legally separate from the other cells and
each member owns their own cell. Hydra covers the protection
of P&I clubs as follows:
• 100% between USD 30 and 100 million.
• Maximum USD 107 million of the coverage between USD
100 and 750 million.
The Swedish Club’s share is approximately 4% of the
business. For more information on International Group see
www.igpandi.org.
The Swedish Club also has its own reinsurance solution that
covers Marine, Energy, FD&D and P&I up to USD 10 million.
To minimise counterparty risk, there are requirements
on participating reinsurers to have a minimum rating of
A- (Standard & Poor’s) or A3 (Moody’s). In 2024, all of the
reinsurers had a rating of A or higher.
For claims management, guarantees are sometimes accepted
from P&I clubs, known insurance companies or banks. There
is a low level of risk associated with such guarantees. In
December 2024, outstanding premiums older than 3 months
were 1.2 (0.6) % of the 2024 gross premiums written.
Operational risks
Operational risks can arise from missing or inadequate
processes, human error, system deficiencies or external
events. The Club also has subcategories of operational
risks that include climate, legal and compliance risks.
Process risks arise when internal processes are insuf昀椀cient or
fail to work as intended. These risks are dealt with via regular
process evaluations and incident management. Work flows
are documented and standardised to ensure that processes
are effective and robust. Human error attributable to employees
is minimised via regular trainings, skills development, follow up
on incidents and clear work instructions.
System risks area related to errors or de昀椀ciencies in ICT
systems and technological solutions. They are managed
by testing new systems before they are implemented, as
well as evaluation and risk assessment of the suppliers of
Insurance year
Estimated 昀椀nal claims
cost at the end of:
Claim year (net)
one year later
two years later
three years later
four years later
昀椀ve years later
2019
2020
2021
2022
2023
2024
108,757
121,670
118,859
118,232
120,504
118,853
125,892
138,169
132,101
138,177
135,123
175,060
177,591
171,416
164,992
146,885
155,655
157,913
145,463
127,774
167,769
The Swedish Club | Annual Report 2024
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