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Dec 6, 2023
Lockton P.L. Ferrari

Renewal Bulletin No. 13/23 - Club Swedish

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:


P&Imutual entries


  • 7, 5% increase general increase for the policy year 2024/2025


  • No changes in P&I deductibles would be applied.




  • 7, 5% increase general increase for the policy year 2024/2025


  • Deductibles apply on costs as follows: USD 12,000 and 25% in respect of costs in excess of USD 250,000


 The Board noted that the stable position is in line with the Club’s expectations,reflecting a cautious approach in their underwriting strategy as well as inevitable phase out of older tonnage.

The Club’s mutual P&I membership renewed on 20 February 2023 with a retention rate of more than 96 % against a General Increase set by the Board at 10%. The mutual portfolio has remained stable during 2023 with entered gross tonnes for Owner’s mutual P&I currently standing at 58 million. The Club is grateful for the continued trustplaced with the Club.

Concerning the FD&D the Club insures around 1450vessels (65 million GT) for these risks and the ambition is to continue thegrowth and to market the FD&D product to members in need of advice andlegal protection.

The Club renewal circular sets out the main highlights from the Clubs operating environment which were considered when deciding the general increase requirements:


  • Frequency in P&I claims overall has seen a slight decline in the current year , however, premium is still insufficient to cover the expected costs of future claims,     particularly driven by the continuous impact of inflation in the last three-year period.

  • The current claims inflation environment demands proactive and responsible measures to adjust premium rating levels. Accordingly, the Board has resolved to implement a General Increase of 7.5% for the 2024/25 Policy Year. This step is vital to ensure the Club continues to maintain a balanced portfolio and remains resilient, especially considering the current underwriting deficit and the broader geopolitical uncertainties.


  • To increase deductibles as follows: Standard minimum increase of USD 1,000 for deductibles below: Cargo USD 15,000; Crew USD 10,000; 3rd Party USD 25,000; Other USD 10,000


  • Any supplementary call for this year will initially be decided upon in 2024. The current estimated supplementary call for 2024/2025 is 0%


  • The release call for 2024/2025 is presently set at 15%. Members should be aware that, even if a release all has been paid, the Association retains the right to make overspill calls as per the P&I Rules (Rule 24)


  • The anticipated combined ratio, absent adjustments in premium to cater for inflation, is expected to be above 100% and impair the overall results and the last year’s run off trend has also been negative, which further needs to be taken into consideration for the forthcoming year. With the above in mind, the Board of Directors has decided on a 7,5% General Increase for the policy year 2024/2025 also for FD&D.


  • The estimated release call for  2024/2025 for FD&D is 5%.










Renewal Bulletin No. 13/23 - Club Swedish
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