THE Standard Club’s double-digit premium hike demand is finding acceptance from its membership and will be enough to bring its underwriting result to somewhere fractionally over breakeven point in the year ahead, according to its chief executive.

The marine mutual’s combined ratio hit 121% in the past year, squarely in the middle of the range for Standard’s peers, but still implying payouts and operational costs of almost $6 for every $5 taken in.

But the decision to impose a general increase of 12.5% — after increases of 7.5% in 2020 and 10% in 2021 — should see that CR fall to just a few percentage points above the 100% mark, Jeremy Grose told Lloyd’s List.

In opting for 12.5%, Standard joins the American Club, Britannia, London, Steamship, the Swedish Club and the UK Club, who are all out to grow their top lines by that amount, by various means.

The Japan Club is seeking a 10% general increase, while Skuld is gunning for what it calls a 10% minimum market adjustment. Gard, the world’s biggest P&I club, has used its muscle to undercut the pack, with a 7.5% internal target for more revenue, again pricing on loss record.

At the top end of the spectrum are increases of 15% at North and West of England.

The only outlier is Shipowners’ Club, heavily focused on smaller tonnage, which has pitched lower, with a GI of just 5%.

Mr Grose said the most notable difference between the current renewal round and those he has experienced over the past 25 years or so is that they are largely being conducted by Zoom rather than face to face.

“We were fortunate that there was a bit of opening up in the course of last year, so we took the opportunity to re-establish connections on a face-to-face basis with our members where we could,” he said. “But this is the second year of doing renewals on video platforms. We’re a little bit more practiced at it. Everybody’s used to it and everybody’s familiar with the process, so it works quite smoothly.”

While there are elements of upside in the savings of travel time and travel cost, it is important not to lose contact with how members are feeling. Overseas offices are coming into their own in this respect.

Standard Club has adopted hybrid working in London, with employees expected to put in a minimum of two days in the office, although some people opt for more.

But hot-desking has been the norm for some years, and the club’s ratio of desks to headcount is about 60%.

“Lots of people in P&I spend a lot of time travelling around the world in normal circumstances, so they are often working outside the office. Nowadays, more people are doing that.”

With most of February yet to go before the renewal season is complete, the feeling is that members are responding well to the 12.5% premium increase, and that the renewal outcome will be satisfactory.

“Nobody wants to pay more money than they do already, but overall there is a recognition that rating had got too low across the industry … and needed to be increased to support the system,” he said.

Justification for the move is similar to that advanced by Standard’s International Group rivals, including more costly claims, strains on the IG pool system, and the coronavirus backdrop.

While Standard has suffered large claims, none have made it into the pool this year, although it is too early to exclude the possibility definitively.

The club’s investment portfolio is defensively positioned, largely in bonds. With bond yields currently rising after US equities suffered their worst month since the global financial crisis in January, that is a happy place to be right now.

“Things are turning out better than anticipated. Where we had budgeted for 106% as a combined ratio for the year, we should be either at or slightly better than that.”

Standard’s renewals are about 45% at this stage, in line with expectations with the best part of three weeks still to go, and the renewal rates will likely top 95%, as is usual.

No major fleets are known to have changed hands in this renewal round, with churn in any case much reduced from that typical of the past. However, some owners always hold out until the last minute before signing up.

Three years of significant rate hikes may be enough to stabilise the situation, Mr Grose suggested, despite a report from one prominent broker suggesting that they will go 50% higher still between now and 2024.

“The rating increases that we are achieving now are to address [things] for next year. With the rate adjustments being made, we should be in a very good position. We had a plan set out that was going to take us to breakeven next year and I expect us to be reaching that.

“A lot will depend on what the claims and investment situations are like, but I’m confident.”

Diversified lines — in the first instance, Standard’s market-leading strike and delay cover — is also making a positive contribution.

“P&I bluewater business is still a little under-rated, I’d say. But we have these other lines of business that are giving us a boost.”

The pandemic has not seen an undue increase in delay claims, although a significant dock strike in Finland did cause a number of payouts.

With freight rates for many vessel types currently the strongest for some time, there are even signs of improved appetite for the cover.