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Firm figures from NorthStandard but Dali disaster set to rock reinsurance market

Photo: USCG Petty Officer 1st Class Brandon Giles USCG officials survey Baltimore bridge wreckage on container ship Dali
The first annual review from NorthStandard since the merger last year shows broadly positive results, but it is yet too soon for much comment on the Dali disaster in Baltimore which is likely to become shipping’s largest-ever insurance claim.

Careful risk assessment, diligent loss prevention measures, tailored terms of entry, and better pricing are all factors that have supported a record increase in premium income, investment returns, and free reserves, NorthStandard said.

Premium income rose by just over 5% to $836m while investment returns climbed by 4.9%. Net combined ratio performance – a measure of profitability – improved slightly, down from 95% to 93% year on year. 

The Club’s Managing Director, Jeremy Grose, commented that its six geographically structured ‘bluewater’ sectors performed well against targets. “Confidence in the Club was shown with the addition of six new ‘bluewater’ mutual members as of February 20,” he said, “while 180 additional ships have been committed, either as of renewal or as newbuilds and acquisitions due for delivery during the current policy year.”

The Club continued to invest in digital services and launched a new initiative, ‘Get SET!’, to provide shipowners with a portfolio of vessel-based loss prevention technologies. These include new situational awareness systems in which the Club is collaborating with partners on the development and roll-out of AI-enhanced systems.

It is, of course, too soon for much comment on the Dali catastrophe in Baltimore. However, according to Lloyd’s of London chairman, Bruce Cargenie-Brown, speaking at the end of March, this could well prove to be shipping’s largest-ever insurance loss.

In its annual review, NorthStandard said: “Whilst in its early stages, and though the quantum of any loss is as yet unknown, the recent cargo collision and subsequent collapse of the Francis Scott Key Bridge in Baltimore in March 2024 has the potential to impact the outlook of the International Group’s reinsurers and those across the Club’s other reinsurance programmes.”
The International Group of P&I Clubs, with twelve mutual P&I Club members, provides marine liability cover for about 90% of the world’s oceangoing fleet. Its complex reinsurance programme is arranged in three layers above the cover provided by individual clubs and their cooperative arrangements.

The first layer provides $650m of cover, excess of $100m. Layer 2 provides a further $750m, excess of $750m, and Layer 3 another $600m, excess of $1.5bn. Finally, there is a ‘Collective Overspill’ arrangement of another $1b, taking the total to $3.1bn.

The marine insurance industry’s highest-ever payout to date came as a result of the capsize of the cruiseship Costa Concordia off the Italian coast in 2012. Claims are estimated to have exceeded $2bn.

However, the Dali disaster is far more complex and, importantly, occurred in one of the world’s most litigious countries. Claims will also be immensely complicated including but not limited to loss of life, damage to  bridge and ship, delay to vessels in Baltimore, local and international business interruption, supply chain disruption, and worker compensation.