TT Club counts the cost

The Club said that its latest combined gross claims estimate for the three hurricanes is approximately US$64m – a reduction on the estimates thought possible in the immediate wake of the storms. Through its reinsurance programme the Club is extensively protected and forecasts its net exposure will be approximately US$2.5m after facultative, treaty and quota share recoveries.

However, TT Club is warning that reinsurers across the market have experienced record losses, and reinsurance rates are expected to rise sharply in 2006 for exposures in catastrophe areas. As a result, the Club says its reinsurance costs will increase in 2006 and those costs will have to be passed on to its members with applicable exposures.

Despite these concerns, the Club states that its existing policy of applying a 5% claims inflation factor on renewals would be maintained, although there would need to be higher increases, estimated at up to 25% for members with handling equipment, property and business interruption exposures in geographical areas prone to natural catastrophe events.

The Club attributed its ability to mitigate premium rises to its restored financial strength, now back to pre-2001 levels and buoyed up by record 2004 results and positive projections for 2005.