In a bid to secure more competitive pricing, International Independent Tanker Owners Association (Intertanko), is pressing the international group of P&I clubs to cede a large portion of its multi-million dollar reinsurance contract to continental and Bermudian insurers, Lloyd's List said.

Intertanko believes the clubs' programme is too expensive, largely due to majority placement in the London market.

About 85 percent of the first and most expensive layer of the P&I clubs' $2 billion excess loss contract is insured through Lloyd's of London and the London companies market. Although 40 percent savings were achieved on the contract this year, the figure could still be too high in relation to underwriters' risk exposure.

In a report commissioned by Intertanko, leading Lloyd's broker Lloyd Thomson recommends 15 percent of the first layer go to non-London underwriters.

Lloyd Thomson figures show reinsurers have made over $1 billion profit on the reinsurance contract over the five years through 1995.

The report concluded the International Group contract structure has "given reinsuring underwriters the ability to generate unacceptable profit margins.'' The report proposes the 15 percent be increased and progressive forms of risk transfer such as financial reinsurance introduced in the long term.

"The intention is to have open competition for shares in the contract,'' the report said.

Intertanko said there is evidence continental and Bermuda insurers would be prepared to participate if the structure of the programme, which currently has unlimited reinstatements on the policy, was changed. Unlimited reinstatements, which enable clubs to make as many claims as necessary in any one year, are considered unacceptable risks for listed reinsurers.

The report proposes clubs reduce the extent of cover in the first layer, abolish unlimited reinstatements, and partially separate out the oil pollution element.

The proposals have been rejected by the International Group but Intertanko is hopeful that the report will form the basis of discussions for next year's programme.

Intertanko said other shipowners support the proposals.

The association believes the end result will be a reinsurance contract with three competitive forces, including existing underwriters, clubs themselves, and the international reinsurance market.