The CEOs of the two P&I giants which have announced they are to merge have said the move is in a large part to ensure they remain ahead of the changing face of the maritime market and the risks they face.
The North P&I and Standard Club have announced they have entered formal discussions for a proposed merger to create a new global marine insurer and one of the largest providers of mutual cover in the maritime industries. The combined insurer would provide cover for vessels equivalent to 400m gross tonnes.
Jeremy Grose, (below) CEO, Standard Club and his North P&I counterpart Paul Jennings (above) spoke to Emerging Risks, to explain that the combination reflected the changing risk and business environment for shipowners across the globe.
In the statement announcing the move, the two clubs said that the merger “would establish a global marine insurer positioned to thrive in the face of current and emerging challenges and opportunities posed by digitalisation, recruitment, regulation and sustainability”.
It added the merger would help the new insurer navigate the continuing disruptive change affecting the maritime sector and better anticipate challenges ahead.
Grose told Emerging Risks: “Clearly, we have seen larger claims which have been impacting both us and other clubs. There is a certain amount of volatility in the market for our members.”
He added the combined entity will also enable the club to use technology to better support their members.
“Technology is playing a greater part in every interaction we have and the exposures are changing which is also creating the need for new skills to support members. We have recently set up a group which is designed to support members in their transition to new fuels.
“It will create different risks, see the use of technology and it likely to present challenges for insurers around potentially new types of liability claims.
“These are large investments and if we do not have to do it as a group there are benefits.”
“We are seeing change and it is moving at a faster pace with shipping globally,” explained Jennings. “Challenges are also opportunities and we are able to create a large team of experts that can look to those opportunities in the right way.”
He added: “This merger, we believe, will allow is to be ahead of the changes that are to come.”
Grose agreed saying that while there were cost benefits from the merger, at its heart the move was to be robust in the face of the current and future challenges.
“As Paul mentioned we want to get ahead of the changes we believe are coming,” he added. “There is a lot of change already and we have all seen the impact of the pandemic. We now see a change in the way our members do business and also growing geopolitical instability.
“While we had no idea of the current geopolitical crisis when we started to talk about the merger it highlights the changing nature of the world our members’ face. There will be a lot of change for us to get ahead of in the future.”
Jennings added: “Both boards, which contain a number of our members, unanimously supported this move. We will now hold meetings with the members at the end of May and if there is an agreement we will then look to engage with the regulators. If all the requirements are met the merger will be completed on 20 February 2023 given the importance of that date to the P&I sector.”