Insurance broker Gallagher predicts that more mergers between protection and indemnity mutuals could be announced this year.

Gallagher executive director Malcolm Godfrey believes the other 11 members of the International Group of P&I clubs have already responded to the pending marriage between North P&I Club and the Standard Club with merger proposals of their own.

He said the significance of the North P&I-Standard Club merger for the marine insurance industry should not be underestimated, and it will start a “domino effect” of consolidation among other clubs.

“The following 12 months will be critical for the future of the International Group,” he added. “I expect there could be another announcement before Christmas.”

Gallagher divisional director Alex Vullo said the topic of merger would be “on the agenda at every P&I club board meeting”.

Godfrey told TradeWinds that the merger of North P&I and the Standard Club is the biggest structural change in P&I in his long career in the industry.

“It is the first actual voluntary merger between two A-rated clubs where no one knew it was going to happen until it was announced,” he said.

But which other clubs are likely to merge is an open question.

The American Club and Japan Club are outliers that would seem unlikely to be pulled into a European consolidation scenario.

That would leave the Scandinavians, Gard, Skuld and the Swedish Club, and the remaining UK-based mutuals — Shipowners’ Club, UK P&I Club, Britannia, Steamship Mutual, London P&I Club and West of England — as potential partners.

As the UK Club and Britannia — and Skuld and the Swedish Club — have already tried and failed to merge, the potential combinations are limited even further.


The longer-term outcome of subsequent consolidation moves could be the emergence of a group of four super-clubs that dominate as much as 75% of the International Group pool claims Godfrey predicted.

That could be enough to trigger changes to the International Group Agreement (IGA) governing competition between member clubs.

Godfrey said retention of the International Group’s reinsurance scheme is critical to a competitive P&I industry.

“We at Gallagher are strong supporters of the International Group and the spirit of providing maximum cover at the lowest cost,” he said.

“Should a series of mergers impact on the ongoing viability of the group to function, can all of this be guaranteed?”

There have been suggestions that under the IGA, clubs may be able to compete freely for North P&I Club and Standard Club clients’ accounts following the merger, under a clause known as “free business”.

Godfrey does not expect the merger to trigger the “free business” clause.

But he questioned whether both clubs have a “moral obligation” to allow shipowner members that are against the merger to move tonnage to another club without the penalties agreed under the IGA.

“For those members that may not want to be part of this, or indeed any other possible future merger, should they not also be given the option to move their vessels freely to another club, should they so wish, without hindrance?” he asked.

The merger is subject to a 27 May member vote.

Paul Jennings, chief executive of North P&I Club. // Photo: North P&I Club Photo: North P&I Club