yacht p&i club

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Protection & Indemnity Clubs

What is a p&i club.

The roots of the Protection & Indemnity Club or a P&I club were founded in 18th century England. Those were the days of sailing ships and extremely slow and inefficient communication system. Ship owners and the underwriters had limited contact and the hull insurance did not cover all aspects of loss on board. A group of ship owners formed an association to provide each other insurance cover. This association was a non-profit making body controlled by a group of close-knit ship owners. These associations were named as Mutual Hull Insurance Clubs. The basic principle of the club was that each member of the group of ship owners would share with other members the cost of any hull claim, which an individual member suffered. It was paid rate ably according to the value of the vessel or vessels owned by that member of the club. This spread the risk over a number of owners and provided the cover, which was otherwise lacking in the insurance market. Pooling of risks made the cover cheaper than what was available in the market. In addition, the club was able to have greater control over the handling of claims when compared to the insurance cover provided by underwriters. The increase in the volume and the complexities of world trade expanded the risks covered. In due course, the mutual insurance organisations joined forces to form the present date Protection and Indemnity Club. Most of the Protection & Indemnity Clubs were established by the beginning of 20th century. They were administered by a group of members, the committee, which met periodically to decide on the payment of claims and the levying of calls (premium).

Covers provided by the P and I club

Following are the typical covers provided by a P and I club:

• personal injury, claims to cover third party liabilities covering death or injury to crew, passenger and stevedores. etc.
• crew claims to cover repatriation
• collision liabilities
• fixed and floating objects claims
• cargo claims
• environmental pollution claims
• miscellaneous claims e.g. wreck removal, customs fines etc.
• freight, demurrage and defence for disputes under charter parties.

Claims other than above can also be considered under the so-called ‘Omnibus Rule’, in which the club committee has the discretion to consider deserving claims from any member at any time.

What is “call money” and how is decided by the P and I Club?

The premium rates to be paid to the club by a ship owner are called the “call money”. The amount is decided by the committee based on the fleet’s ship types, ages, gross tonnage, trades, flags, crew nationality, exposure to risks, and other factors including the member’s claims record and the likelihood of large claims in the coming year. The member is advised of the total estimated call for the next 12 months; this comprises of an advance call and a supplementary call. Advance calls are levied on all members at the start of the P & I year, which is February 20th (on this date sailing vessels would depart for the Baltic from ports on the north-east coast of England following their winter lay-up and by tradition and still is the date from which insurance was required). Later in the year, if claims have been heavier than expected, the managers will ask the members for a supplementary call to “balance the books”. Clubs aim to be accurate in their predictions of future claims so as not to burden owners with supplementary calls. Refunds are made when income (calls + investments) exceeds outgoing (claims + expenses).

Who are P&I club correspondents and what are their functions?

P & I clubs retain correspondents at numerous “ports worldwide. In the USA, a correspondent is normally a law firm with maritime lawyers. The correspondents:

• Are for legal reasons, representatives and not agents of the club;
• Will attend member vessels when so requested by the master or agent in order to protect a member’s interests;
• Are generally well acquainted with the club’s rules and policy, etc.;
• Will report any occurrence likely to result in claim on the club;
• May, pending instructions, appoint surveyors to inspect damages;
• Maybe instructed by the club “to offer letter of undertaking in case of possible liability. In most cases of bunkering oil pollution or damage to jetty etc., a bond is to be posted to avoid arrest.

Most clubs provide the ships with a list of correspondents.

How are claims of P& I clubs paid?

~Club LIMITS have been updated. Below for understanding purposes only~

When a member of a P & I club has a claim, the first $5 million will be met by the club’s own fund. In excess of $5 million and up to $30 million the claim is divided among the member clubs in the International Group Pool (including the club making the claim), with the pooling contribution of each club being calculated taking into account its entered tonnage, premium income and claims record in the Pool. For claims in excess of the Pool limit, the International Group arranges an Excess of Loss reinsurance contract in the market; this currently provides cover for $2000 million ($2 billion) in excess of $30 million in relation to all types of claim except oil pollution, where the limit is $1000 million ($1 billion).

Should the claim ever exceed the upper limit of the Excess of Loss Contract, it should fall back on the Pool and be borne by each club pro rata according to its entered tonnage. Such a claim is called an “ overspill claim ” and would be funded either from the club reserves or by making a special “ overspill call ” on the membership. For most of the history of die P & I clubs, there is no upper limit to cover, but there is an upper limit of $4.25 billion on overspill claims. Some clubs extensive reinsurance for overspill claims.

Updated Club Limits as of 2016/17

Club cover continues to contain a standalone cover limit for oil pollution of US $1 bn, a limit on passenger claims of US $2 bn, and a combined limit on passenger and crew claims of US $3 bn.

For 2016/17, the individual club retention has been increased from US $9 million to US $10 million, the previous upper and upper-upper pool layers have been merged into a single upper pool layer from US $45 million to US $80 million, and the GXL programme attachment remains at US $80 million. A further 5% multi-year US $ 1 billion (excess of US $100 million) private placement has been effected, and the Hydra coinsurance within the first GXL layer (US $500 million excess of US $80 million) has been slightly increased to include an additional 5% in the layer US $80 million-US $100 million.

Hydra is a segregated cell captive reinsurance company, established in Bermuda in 2005, through which the Group clubs collectively reinsure exposure in the lower and upper pool layers, and co-insure exposure in the first layer of the market GXL placement (US $80 million- US $580 million).

How does a ship owner register his claim?

A ship owner, who is a member of the club, must give immediate notification of any incident, which could result in a claim or liability within the scope of the club’s cover. Once a claim or a potential claim has been notified the club takes over the investigation and handling of the claim. It takes the help of the correspondents, surveyors and lawyers appointed by the club.

In liaison with the member, the club will handle the claim to its logical conclusion. If there is a third party claim where the member has to pay, the club will ask the member to pay for the liability. Once the member pays the amount, an indemnity (i.e. reimbursement) is asked for from the club in accordance with the club rules and the member’s terms of entry. The amount recoverable is subject to a deductible i.e. an amount agreed by the member to bear himself before he can claim from the club.

Which liabilities are normally not covered by the P & I clubs?

Clubs will not normally cover:

• Ad valorem bill of lading
• Delivery of cargo to a port other than the port specified in the bill of lading;
• Failure to arrive or late arrival at a port of loading;
• Delivery of cargo without production of bill of lading;
• Ante-dated or post-dated bill of lading;
• Clean bills of lading in case of damaged cargo;
• Deck cargo carried on terms of an under-deck bill of lading;
• Arrest or detention of an entered ship.

What are the P&I covers for pollution?

P & I cover for pollution liabilities is generally to the extent that the pollution is as a result of an escape or discharge or threatened escape or discharge of oil or any other substance. Clubs have traditionally covered:

• Liabilities for damages or compensation;
• Costs of reasonably-taken measures for preventing, minimizing or cleaning up pollution;
• Costs or liabilities incurred as a result of compliance with government directions during a pollution incident;
• Special compensation payable to salvers;
• Fines for pollution.
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January 24, 2017 at 6:14 pm

The details for the IG pool seems vary much out of date. The incurring club limit is now 10 million and the pool stretches to much higher now apart from hydra self insurance

January 25, 2017 at 10:50 am

Rightly pointed, these figures are for understanding purpose only. Have updated the same. You can find the updated chart here http://bit.ly/2kgWvoo

December 28, 2018 at 8:56 pm

No information about market call…..

July 23, 2019 at 6:25 pm

Its very good for basic understanding… What happens if one Ship owner has too many claims from P& I club?

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Sirius Mutual P&I Association

sırıus p&I club

Protection and Indemnity  Experts

We are serious about protecting your future

We protect our members.

Sirius Protection and Indemnity is a Mutual P&I Club. We provide P&I Coverage for our  Ship Owner members with excellent service.

we support shıp owners

We support our members against the P&I risks of maritime ventures resolving problems with many years of expertise.

we provıde worldwıde coverage

We can provide cover for Worldwide Trading with a vast network of correspondents. 

Yacht owners

We provide P&I coverage for Yacht Owners with worldwide trading.

H&M COVER

We offer Hull and Machinery coverage for our Ship Owners members.

CHARTERER P&I

We cover Charterers for their P&I Risks. Our cover includes Damage to hull risks along with FDD risks.

"You are not alone at sea. We are there for you when you need us."

Our new NorthStandard site is now live. There will be no new content or updates added to this site. For the latest information, please visit our new site north-standard.com .

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What is P&I?

Protection and Indemnity (P&I) is a type of insurance that shipowners purchase to cover the potentially huge costs of any harm they accidentally cause to people, property and the environment. 

As liabilities for injuries, cargo loss, collisions and pollution can far exceed the value of a ship, shipowners have found since the 19th century that the most cost-effective way of buying P&I cover is through not-for-profit clubs of like-minded shipowners. 

Pooling claims

Through these P&I clubs, shipowners pool their insurance premiums to pay claims on a mutual basis. The early clubs soon realised they could operate a similar pooling arrangement between them, reducing costs further. The Standard Club, formed in 1884, joined the first pooling agreement with five other British clubs in 1899. As the clubs grew in size, number and nationality, this eventually became the International Group of P&I Clubs.

Today the 12 members of the International Group provide P&I cover to around 90% of the world’s ocean-going tonnage. The Group’s Pooling Agreement provides a mechanism for sharing all claims of $10m up to around $8bn, much of which is supported by reinsurance.

Liabilities and services

P&I clubs have evolved to cover a wide range of liabilities, including loss of life and personal injury to crew, passengers and others on board, cargo loss and damage, pollution by oil and other hazardous substances, wreck removal, collision and damage to property. They continue to look at new covers to meet industry needs.

They also provide a wide range of services to their members including claims handling, advice on legal issues and loss prevention, and they regularly play a leading role in coordinating the response to, and management of, maritime casualties.

Frequently Asked Questions

Is p&i insurance mandatory for all shipowners.

Yes. All shipowners who use their vessel for business or transportation, or for transporting passengers, workers, or cargo across international seas, must carry P&I insurance. To enter ports around the world, the master must provide a 'certificate of entry' given by the shipowners' respective P&I club, demonstrating their insurance to the port authorities.

How much does P&I insurance cost?

The cost of P&I insurance can change depending on several factors. Such factors could include the size and type of vessel, the nature of the cargo, the trading areas, the shipowner's or operator's claims history, and the necessary coverage level.

How are claims paid in a P&I club?

When a claim is made, the claims handling team will determine whether the P&I policy covers it. If the claim is covered, the claims team will negotiate a settlement with the claimant and pay the claim. The P&I club will also consider any deductible that may apply.

Can I add additional coverage to my P&I insurance?

Standard Club offers many additional covers that complement basic P&I insurance, these additional policies provide extra protection against specific risks or emergencies.

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British Marine offers the level of service you would expect from a P&I club, along with the benefit of fixed costs and excellent financial strength and security.

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Our P&I cover protects you worldwide for third-party liabilities and expenses arising from the ownership or operation of ships, including those relating to cargo, collisions, damage to or loss of property, fines, general average, personnel, pollution, towage and wreck removals.

Leading provider

British Marine is the leading fixed cost provider of P&I cover, offering cover on comparable terms to the mutuals, but without any risk of supplementary calls. And because we were a mutual until 2000, we are in the unique position of offering both the traditional approach of a P&I club and the stability and financial strength of a major commercial insurer.

Understanding your needs

Our P&I underwriters work hard to develop strong relationships with our clients. We keep abreast of market developments that may affect you and many of our team members have experience working in the sectors we cover, so we really understand the issues you face – as well as how to manage them.

Wide-ranging cover

We have a very diverse book of business and pride ourselves on covering an extremely wide range of vessel types. Our experienced underwriters can take on more technical and unusual risks and can also tailor the cover we provide, offering a range of bolt-on covers that cater to your specific liabilities.

These include:

• Charterers’ P&I, damage to hull and bunkers
• Confiscation
• Contractual liability
• Delivery crew
• Offshore vessels
• P&I war risks
• Salvors’ liabilities
• Specialist operations
• Super yachts and yacht crew

We are able to combine P&I and Hull and Machinery cover, and can write 100% of the risk.

Legal Expenses cover available

We also offer Legal Expenses/Freight, Demurrage and Defence cover for legal costs relating to disputes arising from the ownership, operation, sale, purchase or building of ships. The policy covers legal costs only, and not the initial sum in dispute. In the first instance, we try to help our assureds to resolve matters amicably. However, if that is not possible and we believe your claim has the potential to succeed, we will cover your legal expenses to pursue it.

Cover in Asia

Asian P&I business is handled through our sister operation, QBE Asia P&I, which offers the same cover, service and terms and conditions as British Marine. The team is led by a British Marine underwriter and a British Marine claims handler.

Here when you need us

We are proud to offer a claims service that is on a par with the best of the P&I clubs, providing proactive, round-the clock support in conjunction with a comprehensive network of correspondents . We can also help to reduce the likelihood of you making a claim by carrying out  risk assessment surveys and providing guidance on potential improvements.

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Your contact

Guy Pierpoint

Portfolio Manager P&I

+44 20 7105 4881

[email protected]

P&I Online

Correspondents

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 Claims Emergency

+44 203 829 5858

+65 8683 3190

The claims response service is available 24 hours a day, 7 days a week and provides immediate global assistance to all of our Members.

Calling the emergency contact number provides a quick and effective way to speak directly to a duty Shipowners’ claims handler in the event of an incident or casualty involving an entered vessel.

During office hours the emergency number will redirect to the relevant corresponding office switchboard.

Alternatively, Members can request assistance from our network of correspondents located around the world.

Ensuring  Peace of Mind

Shipowners is a mutual insurance association

With over 165 years of experience in providing Protection and Indemnity (P&I) cover, Legal Costs Cover and associated insurances for smaller and specialist vessels, the Shipowners’ Club has an in-depth knowledge of the risks and liabilities you face when operating your fleet.

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* As at 31 December 2023

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Our core services

We provide comprehensive insurance solutions which enable Members to operate with confidence.

In the unfortunate event that an incident should arise, our Members have access to a team of specialist claims handlers, each going the extra mile to provide a tailored and timely response.

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Additional support and services

Our support for key stakeholders is reinforced by our range of services which are provided by experts in their field. 

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Corporate Responsibility

“Responsibility and accountability have always been at the core of what we do at the Shipowners’ Club.”

Louise Hall Director of Loss Prevention/Corporate Responsibility

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