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Rule 12 Estimated Total Calls and Last Instalments

1 Before the commencement of each Policy Year, the Association shall decide what percentage of the Estimated Total Calls of all Ships entered for that Policy Year is to be collected during that Policy Year and what proportion shall be deferred for call in later years (the Last Instalment).

2 The Association may at any time after the end of a Policy Year call for the Last Instalment in whole or in part. All Last Instalments so made shall be calculated pro rata of the Estimated Total Calls in the relevant Policy Year.

3 Notification of the proportion of Estimated Total Calls to be collected during the Policy Year to which it relates, and Last Instalments deferred for payment in later years shall, if practicable, be given to Members prior to 20th January.

4 A Ship entered in the course of the Policy Year shall pay a daily pro rata proportion of the stipulated Estimated Total Call, including the Last Instalment, for the year.  

Guidance

The provisions of Rule 12 do not apply to fixed premium entries.1

(A) …what percentage of the Estimated Total Calls…is to be collected during that Policy Year… (Rule 12.1)
The Estimated Total Call to be paid by a mutual Member for any given Policy Year can be split into two components. The first part consists of the proportion of the Estimated Total Call that is collected during the Policy Year to which it applies. This part of the Estimated Total Call is collected in three instalments,which is intended to assist the Member’s cash flow. 

The second part consists of the proportion of the Estimated Total Call that is deferred for payment in later years and is defined as the Last Instalment. This proportion of the premium is due on the date specified by the Association.

The proportion of annual premium that is to be collected during the Policy Year to which the premium relates and the proportion that is to be deferred for payment in later years (the Last Instalment)  is determined separately for the P&I cover and the Defence cover. 

(B) …and what proportion shall be deferred for calls in later years (the Last Instalment)… (Rule 12.1)
The Last Instalment is  a premium which is payable in relation to a particular Policy Year but payment of which is deferred until the subsequent Policy Year or later Policy Years. Therefore, it is important to understand that the Last Instalment constitutes an integral part of the Estimated Total Call3 for an entry for the particular Policy Year; it is only the time of payment of a proportion of that premium that has been deferred.4 As a result of such deferral the Association is able to gain a better view of the overall financial result for the Policy Year before the Last Instalment is levied on the Membership. Therefore, if the financial result for the Policy Year is substantially better than anticipated, the Association may decide to waive the Last Instalment in whole or, more likely, in part.

Although Rule 17 provides for repayment of premium, the ability of the Association to review the quantum of the originally Estimated Total Call by quantifying the level of Last Instalment is likely in most cases to make use of Rule 17 redundant. 

(C) The Association may at any time after the end of a Policy Year call for the Last Instalment… (Rule 12.2)
Payment of the Last Instalment can be required at any time after the end of the Policy Year. The Association normally endeavors to call for payment during the course of the first twelve months following the end of the Policy Year to which the premium applies, but it is not obliged to do so and the Last Instalment can, if necessary, be deferred for a longer period of time, but cannot be levied after the Policy Year to which it relates has been closed.5 

(D) All Last Instalment shall be calculated pro rata of the Estimated Total Calls… (Rule 12.2)
The Last Instalment for any Policy Year will be calculated as a percentage of the Estimated Total Call that has been determined for the relevant entry for that Policy Year. For example, a Last Instalment of 20 per cent means that one fifth of the Estimated Total Call – or 20 per cent – will be deferred for payment in later years. In such a case, the proportion of the Estimated Total Call collected during the Policy Year to which it relates will be 80 per cent. However, the actual Last Instalment when finally levied may be for a lesser sum than that which was initially forecast. 

(E) Notification of the proportion of Estimated Total Calls to be collected during the Policy Year to which it relaters and Last Instalments… (Rule 12.3)
Members need to know well in advance what amount of premium will be levied for any Policy Year including any variation that may be applicable to them pursuant to Rule 11 in order to enable them to decide whether to continue to have their Ships entered in the Association, and/or to incorporate the expected premium cost into their own budgets. Therefore, Rule 12.3 provides that notification of the proportion of the Estimated Total Call that is to be collected during the Policy Year to which it relates, and the Last Instalment shall be given whenever practicable prior to 20 January before commencement of the relevant Policy Year. 

(F) …pro rata proportion of…stipulated Estimated Total Call, including the Last Instalment … (Rule 12.4)
Ships which are entered after 20 February in any Policy Year shall pay that proportion of the Estimated Total Call, including the Last Instalment, for the whole of that Policy Year which the number of days of entry for such Ships bears to the total Policy Year. The reason for this is that each Ship constitutes a risk as from the time of entry and has to share proportionately in the risk of all other entered Ships. 

Where the entry of a Ship is terminated or ceases during the Policy Year, the Member remains liable for the Estimated Total Call and Last Instalment on a pro-rata basis pursuant to the provisions in Rule 26. The proportionate liability of such Ships to pay such premiums and calls relates to all claims incurred by the Association during the Policy Year, regardless of whether the events giving rise to some or all of such claims occurred before or after the entry of the Ships.6

 

 

1 See the Guidance to Rule 10.2.
2 See Rule 20.1.
3 See the Guidance to Rule 10.
4 Last Instalments are due on the date specified by the Association. See Rule 20.5. Rule 12.
5 See the Guidance to Rule 16.2 concerning the closing of Policy Years.
6 See the Guidance to Rule 26.