The International Group of P&I Club


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The International Group of P&I Club

The original pooling agreement of 1899 between the UK Club, Britannia, Standard Club, London Club, Newcastle Club and Sunderland Club.

The International Group of P&I Clubs exists to arrange collective insurance and reinsurance for P&I Clubs, to represent the views of shipowners and charterers who belong to those Clubs on matters of concern to the shipping industry and to provide a forum for the exchange of information.

Each of the thirteen constituent P&I Clubs is an independent, non-profit making mutual insurance association (or “Club”), providing cover for its shipowner and charterer members against liabilities of their respective businesses. Each Club is controlled by its members through a Board of Directors (or Committee) elected from the membership; the Board (or Committee) retains responsibility for strategic and policy issues but delegates to full-time managers the day-to-day running of the Club.

Together the Clubs insure over 90% of the world’s blue-water tonnage.

The Insurance Pool

Although the Clubs compete with each other for business, they have found it beneficial to pool their larger risks under the auspices of the International Group. This pooling is regulated by a contractual agreement which defines the risks that are to be pooled and exactly how these are to be shared between the participating Clubs. The Pool provides a mechanism for sharing all claims in excess of US$5 million up to a limit of about US$4.25 billion. For a layer of claims between US$50 million and US$2.030 billion the Group Clubs purchase reinsurance from the commercial market (see below). The Pooling system provides participating Clubs with reinsurance protection at cost to much higher levels than would normally be available in the commercial reinsurance market.

Reinsurance of the Pool

The International Group arranges a market reinsurance contract to help the Pool deal with claims which exceed $50 million. This is the largest single contract in the world’s marine insurance market. It currently extends for claims against shipowners to a little over $2.030 billion per claim save that in respect of oil pollution the maximum is $1bn ($1000m), which is the limit on the oil pollution cover given by the Clubs; there are lower limits for claims against charterers. By bringing together in this way the risks of the great majority of the world’s tonnage, the International Group is able to obtain for the pooling Clubs the maximum reinsurance capacity on the best terms available worldwide.

Because International Group Clubs share their claims through the Pooling system, they have a common interest in loss prevention and control, and in the maintenance of quality standards throughout the membership.

The Representative Function

The International Group provides an effective voice for the shipowner and charterer members of the individual Clubs, particularly on new Conventions and legislation affecting shipowners’ and charterers’ liabilities and the insurance thereof. It carries out this function in relation to inter-governmental bodies such as IMO and UNCTAD as well as to national governments.

Exchange of Information

The International Group provides a useful forum for sharing information on matters of concern to Clubs and their members. These include general issues such as oil pollution and personal injury as well as current problems in particular ports or in relation to the carriage of particular cargoes.

Operation and Control

Strategic and policy issues of concern to the International Group are determined by each Club individually. It is for the Board of Directors (or Committee) of each Club to decide upon the extent to which it desires to delegate authority to its managers to deal on its behalf with particular matters.

Routine business is usually dealt with by correspondence between the managers of the International Group Clubs or their representatives, who also meet in committee to analyse and clarify more complex issues, with a view to formulating recommendations for the individual Clubs to consider.

The monitoring of the pooling contract involves the managers of the International Group Clubs or their representatives working together to examine any proposed alterations or extensions to the cover being provided by each Club in order to assess the continuing compatibility of the risks that are to be pooled. Similarly, they review the accounting policies of each participating Club with a view to enabling the other Clubs to monitor its financial strength. They also operate the contractual machinery for sharing the claims in the Pool with the aim of producing an equitable financial result as between the participating Clubs. Finally, they co-ordinate the detail of the Pool’s reinsurances; the contract itself is placed annually by brokers acting on behalf of all the participating Clubs.