Rule 7 Contribution and Advance Calls

CONTRIBUTION AND ADVANCE CALLS

1. Any entry for a period identical to an association year shall be allocated to the association year concerned. Any other entry shall be allocated to the association year in which the relevant Policy Period incepts. Unless otherwise provided, all contribution or calls in respect of any entry shall be allocated to the relevant class of the relevant association year.
2. Subject to the exercise of the power of the Managers set out in General Rule 3 to accept entries upon special terms and subject to General Rule 6.4, Members who have entered ships for insurance in any Class of the Association in any association year shall pursuant to the Articles and the Rules mutually insure each other as hereinafter set out against liability, loss, cost and expense which they or any of them may suffer, become liable to pay or may incur in respect of such entered ships. For this purpose the said Members shall contribute to the Association the advance call due from them in respect of that class. Such advance call shall be such sum which, when taken in conjunction with other advance call due, will provide for the Association such funds as are in the opinion of the Directors from time to time required to meet, as regards the class and association year concerned:
   1. the losses, claims, expenses and other outgoings (whether incurred, accrued or anticipated) which in the opinion of the Managers necessarily and properly fall upon it,
   2. such transfers to reserves or provisions as the Managers in their discretion consider it expedient to make, including transfers to reserves and provisions in respect of any deficiency which has occurred or which they consider may occur in respect of any closed policy year of the same class,
   3. the proportion attributable to it of such sums as the Association may by any applicable law be obliged to set aside in order to establish and/or maintain an adequate solvency margin and/or guarantee funding in respect of any association year or otherwise. Contributions from Members to such sums shall be calculated pro rata to the advance call in the relevant association year,
   4. any sums which any person is called upon but failed to pay in full to the Association,
   5. the cost of reinsurance effected by the Association pursuant to General Rule 5 and of maintaining an equalization reserve,
   6. Such of general expenses of the Association as the Directors may from time to time in their discretion consider fit to charge against the business of the Association in respect of such class and association year.
3. The Directors may create and maintain an equalization reserve for the purpose of contributing to the cost of exceptional claims in any class or classes that may arise from any occurrence whether past or future. For this purpose, the Directors may, in their discretion, make such transfers from the funds attributable to any association year to the equalisation reserve. In the event of exceptional claims, the Directors may make such transfers to any class or association year affected by such claims as in their discretion they consider fit.
4. Before the start of each policy period the Directors shall decide for each entry or proposed entry in each class the advance call which they propose to levy on each Member or proposed Member in respect of the coming policy period (subject to any special terms upon which such ships may be entered). In fixing the advance call rate of any ship the Directors may take into account all matters which they consider to be relevant including, without prejudice to the generality of the foregoing, the degree of risk which is in their opinion estimated to be involved in the proposed insurance.