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P & I Insurance cover and Members of IG club

Protection and Indemnity (P and I) insurance is a massive part of the shipping business. It is commonly referred to as "P & I" and provides cover to shipowners and charterers against third-party liabilities encountered in their commercial operations. It emerged from a need among shipowners for coverage beyond the traditional Hull Coverage and Cargo Coverage, namely the third-party liabilities that can arise from crew members and passengers, other vessels, and properties.

A ship without proper P and I coverage is virtually untradeable. Charterers and/or cargo interests will not hire a vessel that does not have proper P and I. Therefore, the vast majority of ship owners and operators insure against third party liabilities by becoming a member of a Protection and Indemnity Association (P and I Club). Essentially, this is a form of liability insurance.

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The scope of insurance cover available from P & I Clubs is detailed in each of the Clubs’ individual Rulebooks, but generally P and I covers: There are many other risks covered. At the heart of P and I is the concept of "mutuality." Shipowners form a nonprofit association to protect and indemnify one another against third party liabilities. Unlike commercial insurance, the insured ship owners, meaning the "members" of the Club, are both the insurer and the insured. Each P and I Club is controlled by its members. The members of the Club vote for and establish a Board of Directors, many of whom are prominent members of the Club. Professional managers are nominated to run the P and I Club's day-to-day affairs, which includes handling claims, underwriting risks, investment of the Club's funds, day-to-day problem solving, etc.

The Club operates as a non- profit. In broad terms, this means that in any one year, the premium collected from the Club members should be identical to the total expenses and claims arising out of incidents during the same period. To achieve this result members may be required to pay a supplementary premium during a policy year if claims exceed the premium initially collected.

In Club jargon, premiums are referred to as "Calls". So at the commencement of a policy year, Club will ask for an "Advance Call" from its members, which is quoted as a "dollar rate per GRT" of the entered vessel. The advance call is only an installment premium. The Club will routinely ask for an additional (supplemental) call to balance the accounts for that year.

The International Group of P and I Clubs

There are currently thirteen members of the International Group of P and I Clubs (The IG). The primary function of the Group is the co-ordination and operation of the Clubs' claims pooling arrangements. Liabilities that exceed the individual Club retention, which is currently set at US$10 million, are shared between all 13 Clubs following the terms of the Pooling Agreement. Brief details of each club activities explained below:
  1. American Steamship Owners Mutual Protection and Indemnity Association, Inc.(The American Club): It is located in New York City and is a member of the I.G. It is the only mutual Protection and Indemnity Club domiciled in the United States – indeed, in the entire Americas. Running in parallel with a ship's hull and machinery cover, traditional P&I, such as that offered by the American Club, distinguishes itself from ordinary forms of marine insurance based on the not-for-profit principle of mutuality where Members of the Club are both the insurers and the assured. The club's E-rulebook can be retrieved from the website.

  2. Assuaranceforeningen Gard (The Gard): It was founded in 1907 at Norway. The Company's line of business includes the underwriting of fire, marine, and casualty insurance. Their services span the entire spectrum from claims services and distribution of loss prevention updates and Insight articles to workshops, crisis management exercises, and claims seminars. Claims service and loss prevention activities highlight and exemplify the importance of trusted and close cooperation between Gard and their Members and clients. Gard (North America) is the U.S. office for the Gard. Gard's statutes and rules available in its website.

  3. Assuranceforeningen Skuld (The Skuld): It was established in Oslo in 1897 as a P&I club for Scandinavian shipowners. Today, with ten offices around the world, Skuld is a world-leading marine insurance provider with a strong financial position and an 'A' rating with Standard & Poors. They cater to shipowners' needs, the offshore and energy sector, charterers and traders, and the superyacht community. Statutes, P&I Rules, Terms & Conditions available in Skuld's website.

  4. The Britannia Steamship Insurance Association Limited (The Brittannia P& I) : Registered in the UK it is the oldest mutual insurance association of the world. Trusted by its members since 1855, it earned a reputation for providing an exceptional standard of service. History of financial strength and a premium service have established this association as one of the market leaders in the International Group of P&I Clubs. Brittannia's rule book can be downloaded from their website.

  5. The Japan Shipowner’s Mutual Protection and Indemnity Association (The Japan P & I Club): The Japan P&I Club is the sole organization in Japan underwriting P&I insurance for both ocean-going vessels and Japanese coastal vessels. It was founded on 2 October 1950 under the Ship Owners' Mutual Insurance Association Law. The Japan P&I Club became a member of the International Group of P&I Clubs in 1976 and joined the other Clubs in the Pooling Agreement of the International Group of P&I Clubs in 1989. Details of club rules available in its website.

  6. The London Steamship Owners Mutual Insurance Association Limited(The London P & I Club): Abbreviated as London Club was founded and registered in England in 1866. The Club offers FD&D insurance (Freight, Demurrage & Defence) and war risk insurance. It is a member of the International Group of P&I Clubs, an umbrella for thirteen separate clubs insuring 90% of the world's ocean-going freighters. With offices in London, Hong Kong, and Piraeus, Bilbrough the Club focused on quality and ensured it always ready to assist and support members. Details of services and club rule book can be accessible from a pool of designated staff.

  7. The North of England Protecting and Indemnity Association (The North of England) : Founded and headquartered in Newcastle, England today the Club stretches around the world by maintaining regional offices in Greece, China (Shanghai and Hong Kong), Japan, Singapore, Ireland, and the USA. Focussing on safety culture, the Club provides technical and operational expertise from a pool of master mariners and engineers with many years of seagoing experience. The club rules and list of correspondence can be retrieved from the website.

  8. The Shipowners Mutual Protection and Indemnity Association (The Shipowners' Club) : The Shipowners' Club has in-depth knowledge of the risks and liabilities that may arise and provide Protection and Indemnity (P&I) cover, Legal Costs Cover and associated insurances to shipowners. As a market leader, it insure over 33,000 small and specialist vessels across the globe. The club rules and a list of very useful publications also available in their website..

  9. The Standard Steamship Owners Protection and Indemnity Association (The Standard Club): A specialist marine and energy insurer known for its diverse membership, pioneering loss prevention expertise and attractive pricing. The club members are supported by over 200 staff located in offices in the major shipping centers. Details of risk management services and club rules available in their website..

  10. The Steamship Mutual Underwriting Association (The Steamship Mutual): Its aim is to provide a comprehensive high quality P&I service backed by sound underwriting and strong reserves.The clubs comprehensive cover rules and exceptional service details available in its website.

  11. The UK P & I Club (UK Club): Thomas Miller which is an international provider of market leading insurance services manages the U.K. P and I Club and has offices worldwide including an office in Jersey City, New Jersey USA. For a detail knowledgebase and club rules available in website.

  12. The West of England P & I Association(West of England): Originally formed by the Holman shipowning family in the port of Topsham in the southwest of England, the Club has served shipowners for 150 years and was one of the first to insure international tonnage. Today it provides third party liability coverage to over 3,700 ships of more than 93 million G.T. from a worldwide membership, with a further 27 million G.T. of chartered tonnage. The club rules and cover details available in website.

  13. The Swedish Club (Swedish Club): Established in 1872, is a leading marine mutual insurer, headquartered in Gothenburg, Sweden, and with offices in some of the world's strategic shipping centres. Their expert service is available 24/7 from the headquarter in Gothenburg and the offices in Piraeus, Hong Kong, Tokyo, Oslo, and London. The clubs comprehensive cover rules and exceptional service details available in its website.

Noteworthy is that the thirteen I.G. Clubs briefly explained above provide P and I cover for approximately 90% of the world's ocean-going tonnage. Through the unique I.G. structure, the thirteen-member Clubs, while individually competitive, share their significant loss exposures through the I.G. "Pooling Agreement." This is a form of reinsurance, which will protect anyone Club against the financial consequences of a significant catastrophe. The I.G. also allows for the sharing of knowledge and expertise on matters relating to shipowners' liabilities and the insurance and reinsurance of such liabilities. Although twelve of the thirteen I.G. Clubs are domiciled outside of the United States, all maintain a presence in the U.S. via regional offices, managers, and correspondents.

By visiting the web site for any of the P and I Clubs mentioned above and downloading a copy of their Rulebook will assist better understanding of the nature of service provided. Also a list of local offices that the The Club is handy.


Visit the web site for the International Group of P and I Clubs to identify all the above I.G. Clubs and learn about the I.G.'s role overall and the pooling agreement.

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