NorthStandard identifies path for the future of P&I as it realizes early consolidation gains
Seven months after its formal launch, NorthStandard is already realizing tangible benefits from combining two of the best-known names in global marine insurance.
Following an internal restructuring process which ended on 1 September, NorthStandard says the foundations are in place to deliver the full advantages of consolidating North P&I and Standard Club under a single organization.
“Upholding service excellence has been critical during an extraordinary period of uncertainty for shipping,” said Jeremy Grose, co-Managing Director, NorthStandard. “Doing so while combining two legacy marine insurance businesses worldwide confirms our confidence that a consolidated NorthStandard is fully equipped for shipping’s urgent and future challenges.”
Grose added that a rise in the mutual poolable tonnage entered with NorthStandard over the period indicated that the market shared the Club’s convictions. Growing by just over 2.5% between 20 February and 31 August 2023, NorthStandard’s mutual poolable tonnage increased to approximately 260 M GT.
“We are very grateful for the trust being placed in NorthStandard by new and existing Members alike over the first half-year in operations,” said Grose. Despite the continuing global economic and political turbulence, NorthStandard’s financial position at the half year point remains resilient, with positive investment returns, a small underwriting surplus, and an increase in free reserves forecast.
After a reorganization allocating blue-water mutual Members to one of six Geographical Sectors and putting diversified products under the care of Specialty Sectors, NorthStandard’s new structure maintains the tailored and personal service of both legacy clubs as well as providing a sharper activity focus that pools expertise to target growth opportunities globally.
Following the launch, NorthStandard has seen continued growth across its diversified business divisions, thanks to the support from new and existing members and clients. “These are wins based on quality of service, but value for money has also been critical,” commented Paul Jennings, co-Managing Director, NorthStandard. “As well as delivering on plans for diversification, the new organization is proving resilient against inflationary pressures.”
Bringing the legacy businesses under a single roof in Singapore earlier this year has offered a model for balancing a consolidation strategy committed to retaining expertise while eliminating duplicated costs other than by reducing headcount. In this case, a move to a single premises reduced the cost base as previously each region was separately assessed, said Jennings.
NorthStandard had also worked with its reinsurers to negotiate broader agreements for the period ahead, said Grose. “Our reinsurance partners have shown an exceptional and highly appreciated flexibility in helping NorthStandard to secure a key benefit of consolidation,” he said.
Some administrative savings will accrue from February 2024, as insured parties migrate away from legacy policies to unified NorthStandard cover, while the Club is also evaluating the legal cost benefits of reducing the number of its registered insurance entities from the current five.
The tangible gains would influence NorthStandard’s position on this year’s renewal discussions and contribute to building what Grose described as “P&I that is ‘fit for the future’ to support Members in adapting to an increasingly complex maritime world”.
“We are cultivating a new role which seeks to lead and challenge shipping’s key debates in a constructive way,” he said. “The impact of sanctions through 2022-23 has shown that P&I holds a special place in global trade and that governments and regulators are increasingly likely to impose operating restrictions on shipping as part of their policy implementation”.
Jennings added: “The range and depth of discussions at our LISW 23 breakfast event last week clearly demonstrated that the intersection of big power politics continues to have a profound impact on maritime trade routes, the challenges of maintaining free and open seas and the evolving technology dynamics in this crucial sector for world prosperity. As a resource of global expertise, we are well placed to help governments, regulators and the shipping industry to understand the complexities of each other’s challenges.”
Looking to the future, Grose observed: “P&I can provide the same thought-provoking but practically-grounded expert counsel on maritime safety, decarbonization or digitalization to help stakeholders understand the changes needed and the challenges ahead.”
