Commentary: Rule 23 Additional premiums
As appears from the comments to Rule 22, the premium first charged for a policy year is preliminary and referred to as the advance call. As time goes by, the result of the policy year can be more accurately determined. If, in the Club’s opinion, more money is needed to cover the Club’s aggregate of known and expected liabilities, the Board may decide that additional premiums or calls should be charged. An additional call can be looked upon in two ways. Firstly, it recognises the fact that, in a mutual organisation, the Members should make their contributions only if and when required. In the meantime, the Members should keep their money and let it work within their own organisations.
Secondly, a demand for contributions is always undesired. It will disturb the Members’ budget and burden financial years which are already closed and in which no further freight income is available. The Club supports the idea that the advance call should be reasonably sufficient to meet the Club’s obligations. If an additional call is forecast, Members should be advised accordingly at the earliest possible moment and the call be kept as small as possible. Members’ active and dedicated co-operation in keeping the Club informed of casualties and claims in accordance with Rule 10 Section 4 will help to achieve that goal.
23.2 Closing of policy years
The closing of a policy year entails that a decision be taken by the Board that no more additional calls will be levied for that policy year. Members are informed by circulars when a policy year has been closed. Catastrophe calls as per Rule 24 may be called irrespective of whether a policy year has been closed.
As long as a policy year has not been declared closed, the Board may levy additional calls for that year.
23.3 Calculation of additional calls
Additional calls are expressed as a percentage of the net advance call paid by the Member for the relevant policy year. “Net premium” means the premium less commissions, laid-up returns and other deductions, if any.
23.4 Payment of additional calls
According to the last part of the provision, additional calls are due for payment on demand. This means that they should be paid on the date stated in the invoice and in accordance with the payment instructions contained in the invoice.
23.5 Transfer of premiums to reserves
In the second paragraph of this Rule the Club may, in its sole discretion, decide how premiums and calls should best be distributed within the Club either to designated reserves or deficiencies in respect of any closed years.
23.6 Unpaid additional calls
Additional calls represent the means needed by the Club to meet its obligations. It follows from the concept of mutuality that the Club may have to ask the other Members to fill in a loss created when one Member has failed to pay additional calls charged upon him.
Regarding the absence of a lien over the entered ship for unpaid calls, see the comments under 184.108.40.206
It follows from Rule 13 that the Club has a right to set off unpaid additional calls against any amount due to the Member under these Rules or under any other policy issued by the Club.
23.8 Effect of unpaid additional calls
Where an additional call is not paid promptly, the Club has a right – in accordance with Rule 26 – to serve either a written reminder, whereupon the Club shall be relieved of liability after seven days, or to terminate the period of insurance on three days’ written notice. See the comments under 26.5.
23.9 Estimated additional calls can be levied at termination or cesser of insurance
Where the period of insurance has been terminated under Rule 26 or has ceased under Rule 27, there may still be one or more policy years which have not been declared as closed and for which the Member may be called upon to pay additional calls. In order to avoid such additional calls remaining unpaid and being passed on to other Members, the Club may levy an estimated additional call upon a Member whose insurance has terminated or ceased. Such an estimated additional call is referred to as a release call. The extent of the release call should not be less than the aggregate amount of anticipated calls on the policy years not declared closed at the time of termination or cesser and is calculated according to guidelines in the International Group Agreement. The Club may charge a release call in excess of the estimated additional calls.
The Member has two options to discharge his obligation regarding payment of release calls. The Member may either pay the release calls in full which is considered a full and final payment of the calls. In the alternative, he can arrange a bank guarantee for the corresponding amount with the guarantee remaining open until the final policy year is closed.
A Member who has paid a release call is not entitled to a surplus under Rule 36.