Atlantic Insurance & Reinsurance Brokers predicts shipowners can expect a better level of service, and benefit from increased competition, following the merger of North P&I Club and the Standard Club.

Chief commercial officer Richard Adler said he believes the move is a “breath of fresh air” that will make the merged club better equipped to handle increased volatility in the insurance markets.

“It is an opportunity to prepare the mutual P&I system and shipping for the challenges that new environmental regulation, climate change, increased sanctions and other possible black swan events will bring,” he said in the broker’s P&I report.

As both clubs are service minded the merger could bring a “new standard of service” in the mutual P&I world, he said. The scale of the business will also be able to offer some competition to the industry’s runaway leader Gard.

“If played wisely, NorthStandard will be able to compete on more equal terms with Gard, something that the Norwegian market leader and largest marine insurance company in the world welcomes, by the way,” Adler said.

North P&I Club and the Standard Club are due to merge their businesses after the next renewal in February next year.

Negative returns

Alder said that shipowners are likely to be faced by premium increases of between 5% and 12.5% at next year’s renewal.

Although underwriting performances are showing signs of improvement, as major claims fall, investment income is showing negative returns and free reserves are falling. Inflation is also putting pressure on the clubs to raise rates.

“So far, there is little evidence that would justify a return to a zero general increase round at this renewal,” Adler said.