The most TALKED-ABOUT event of the current rapidly receding protection-and-indemnity (P&I) year was something that did not happen. The proposed merger between the Britannia and UK clubs and the tie-up between respective managers, Tindall Riley and Thomas Miller, appeared to be deals that would change the P&I landscape.

The merger plan was unveiled days after the February 2016 renewal of cover; less than four months later it had collapsed. But the fallout from this upset has still to fully play out and the failed merger may yet prove to be a catalyst that brings other clubs together. The prospect of two of the biggest and most respected P&I mutuals getting together in a superclub stirred the P&I clubs into some hard thinking about their own futures and even some preliminary conversations. And it was not just the progressive, modernising end of the market that was involved – some of the traditionalist clubs felt compelled to investigate the possibilities, if market talk is to be believed.

There was little information about the progress of the Britannia-UK clubs discussions through the spring of 2016, with TradeWinds reporting at the time that “silence was breeding scepticism”. There has also been little explanation of what went wrong since the breakdown of talks but there is a widespread view that it was the shipowner directors of the Britannia Club who rejected the deal – as they had in discussions with the Standard Club in 1998.

This was more or less confirmed by UK Club chairman Alan Olivier of South Africa’s Grindrod shipping group, in an autumn report to members. Olivier revealed he and fellow directors felt “great disappointment” that the deal had not gone through, which carries the implication that it was the Britannia side that rejected the merger. He also said the UK board continue to be dedicated to the merger objectives of increased capital efficiency, economies of scale and creating value-added services, so it looks as though the UK Club is still interested in consolidation.

Intriguingly, the autumn review highlights that there is a stable of marine mutuals run by Thomas Miller, including the UK Defence Club, Through Transport Mutual Insurance Association (TT Club), Hellenic War Risks and UK War Risks clubs and International Transport Intermediaries Club (ITIC) with an annual premium income of more than $700m. It is tempting to see this as a hint that if there is not an external partner to merge with, there could be consolidation of a more incestuous kind.

The proposed merger of two top clubs to create a P&I superclub that would be bigger than Gard got a generally positive reception in the market. But as the months passed, there was increasing scepticism that estimates of cost savings of perhaps 10% were too ambitious and realistic short-term financial benefits would be in the low single figures. There has long been a view that it is not necessary to have 13 International Group clubs to provide shipowners with choice in the P&I market. The clubs offer similar cover based on virtually identical rule books, pool claims and collectively buy the biggest marine reinsurance contract. So slimming down to maybe eight clubs would not further restrict competition in a market already subject to price fixing. One very tangible concern about the Britannia and UK Club merger was that it might spark a new European Commission anti-trust investigation into the no-undercutting agreement between the International Group mutuals.