The NorthStandard said it will be setting a 5% general increase for shipowner members at the newly merged mutual’s first protection and indemnity policy renewal in February.
North P&I Club and the Standard Club merged this year to create the industry’s second-largest P&I mutual insurer.
In the first nine months since the two clubs became one, NorthStandard said it had already seen significant cost benefits that have positioned it for underwriting profits — and even an increase in its free reserves.
Chairman Cesare d’Amico described the club’s financial position as “resilient” in what has been a turbulent P&I market over recent years.
In a pre-renewal report, NorthStandard said the merger had helped the club overcome the claims and income volatility of the P&I market.
“The formation of NorthStandard enables us to smooth the volatility of year-on-year market fluctuations and deliver predictability and stability in our operational, financial and technical results in the coming years,” NorthStandard said.
“The significant reductions in operating expense ratios should also help ensure more sustainable premiums without diluting our service-led approach,” it added.
NorthStandard said it had been working with its reinsurers to make the club’s reinsurance cover more efficient while the club’s increased size had allowed it to retain more risk.
It said it is expected to ring up more administrative savings by eradicating duplication and simplifying the merged club’s legal and regulatory structure.
A reduction in claims is also helping the club. It has only had six claims over $1m this year, which is below the recent average, while pooled claims filed with the International Group of P&I Clubs are also at low levels.
NorthStandard is also forecasting an increase in investment income of between 1.5% and 2.5% for the current policy year.
The net result of the lower costs and claims should mean the club’s underwriting remains in profit for the second consecutive year with the help of a positive contribution from NorthStandard’s diversified commercial insurance lines.
NorthStandard is expecting its combined ratio to be just under 100% in 2024.
However, NorthStandard warned that the claims picture could change at any time, while inflation could also push up claims costs.
Its 5% target is still at the lower end of increases announced by P&I clubs so far.
“We must be cautious as the highly volatile nature, number and size of each large claim, particularly pool claims, mean any combined ratio projections made at the year’s mid-point could significantly change by the end of the year,” NorthStandard said in its pre-renewal statement to members.
To account for inflation, NorthStandard will also raise the deductibles below $30,000 by $1,000.