Transport mutual the TT Club has introduced a 30-day cessation clause on all new policies in response to the tough new reinsurance environment.

Club chairman Sir David Thomson said the new clause w ...

Transport mutual the TT Club has introduced a 30-day cessation clause on all new policies in response to the tough new reinsurance environment.

Club chairman Sir David Thomson said the new clause would enable the club to "respond effectively in the event of unsustainable change in the cost or availability of reinsurance".

Thomson also announced a 20% across-the-board rise in renewal premiums. He warned there were "adverse pressures" in all areas.

The Club recorded underwriting losses of $50m (£25.5m) from 1997-2000, which meant it had to get extra funding from investment income and reserves.

After deducting the losses, the Club had about $80m (£50.5m) in reserves and income left at the end of 2000.

Thomson said TT had expected small reinsurance rises in 2002, but were now preparing for more dramatic changes. "Returns for 2001 are expected to be weak as interest rates have fallen sharply and equity markets haven't yet recovered to their former levels," he said.

"The outlook for 2002 is very uncertain and it's clear that the club can't rely upon investment returns to support underwriting results for the foreseeable future."

Thomson said TT's strong points were its long-term position in the transport market, the scope of its specialised cover and the size of its global network. The club has also experienced a recent increase in new business as other insurers become more reluctant to write of unusual transport risks.

But global underwriting policy director Brian Wood said TT was extremely selective in which new risks it accepted. "We're not interested in taking people on for the short term - we want long, stable relationships," he said.

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