Protection and Indemnity insurance, more commonly known as P&I insurance, is a type of mutual maritime coverage offered by a P&I club. While marine insurance companies offer “hull and machinery” coverage for shipowners and cargo insurance for cargo owners, a P&I club covers broader, open-ended risks that conventional insurers are typically unwilling to insure.
Protection is essential for ensuring the safety of seafarers and ships while Indemnity is necessary to compensate for any loss of life, environment, and property. P&I plays a critical role in protecting crews, the marine environment, coastal communities, and third-party claimants in the event of a shipping casualty or incident.
In essence, a P&I Club is owned by its shipowner and charterer members, and its operations and activities are overseen by a board of directors, or committee, elected from the membership. The day-to-day operations of the Clubs are handled by professional managers, either “in-house” or external, who are appointed by and report to their Club board/committee.
The coverage offered by P&I Clubs has grown and adapted over time. What began as protection against collision liability has expanded to address a broad range of people-related risks in the maritime industry. Today, it offers the financial strength needed to ensure ships can operate in an environmentally conscious world, where issues like pollution and wreck removal are high priorities.
Today, P&I Clubs insures their members against a wide variety of risks including:
- Injury, illness, and death of crew
- Injury, illness, and death of passengers and other third parties on board
- Stowaways and the costs of repatriating them
- Damaged or lost cargo
- Collisions
- Wreck removal
- Damage to property
- Pollution
Loss Prevention is at the heart of P&I Clubs
Protection and Indemnity (P&I) Clubs and loss prevention are closely related because one of the core missions of P&I Clubs is to minimize risks and prevent losses for their members. Preventing incidents that could result in claims directly benefits P&I Clubs, as fewer claims mean lower payouts, better sustainability of funds, and potentially lower premiums for members.
Loss prevention resources from P&I clubs are designed to support members in managing risk, preventing accidents, and ensuring compliance with industry standards. These resources are often easily accessible online and are crucial in helping shipping companies improve safety, reduce claims, and ultimately safeguard their business operations.
Joakim Enström, Senior Loss Prevention Officer at The Swedish Club has stated that the main loss prevention issues fall into four areas: Navigational claims, cargo claims, people claims and machinery damage. P&I Clubs publish loss prevention publications written in language which is easily accessible to all nationalities and in a format which can be used in monthly safety training meetings.
“This way, when the case studies are used in training, the seafarer can identify with the problems faced, and some of the difficult decisions that those on board have had to make. When debating the case study with their crew colleagues, the reality of the situations makes discussions more relevant, and learning outcomes more likely to applied should they themselves face a similar situation.” Enström said.
The International Group of P&I Clubs
The International Group is a not-for-profit association of 12 P&I Clubs providing marine liability cover for 90% of the world’s ocean-going tonnage. Through the unique Group structure, the member Clubs, whilst individually competitive, share between them their large loss exposures, and also share their respective knowledge and expertise on matters relating to shipowners’ liabilities and the insurance and reinsurance of such liabilities.
There are twelve separate and independent principal Clubs in the International Group which provide marine liability cover (protection and indemnity) for approximately 90% of the world’s ocean-going tonnage.
- The American Club
- Britannia P&I
- Gard
- Japan P&I Club
- The London P&I Club
- NorthStandard
- Shipowners Club
- Skuld
- Steamship Mutual
- The Swedish Club
- UK P&I
- West P&I
It is worth mentioning that in early 2023, the Standard and North of England P&I Clubs merged to form a unified entity known as the NorthStandard Club. Additionally, since November 2024, discussions have been underway regarding a plan to establish an Indian Protection & Indemnity (P&I) Club. This initiative aims to support domestic fleet owners by reducing their reliance on foreign entities for insurance coverage.
P&I Clubs are today a source of broad knowledge
Apart from their liability protection, P&I Clubs often offer guidance and alerts about industry’s challenges not only to their members but to whoever is concerned about keeping up with maritime trends and insights. As an example, during the 2024 SAFETY4SEA Athens Forum, Ioanna Kafka, Senior Claims Executive, Hull & Machinery Team Greece, The Swedish Club, addressed fire incidents on ships. This is a growing trend in the industry as more vessels experience the hazardous phenomenon that not only endangers the integrity of the vessel itself but the seafarers’ welfare.
P&I Clubs serve as vital repositories of maritime knowledge, combining historical data, regulatory expertise, and real-world experience to educate and support their members. These clubs provide insights not only into technical matters but also on critical topics such as the well-being and mental health of crews on board ships.
For instance, The Britannia P&I Club provides insightful publications, including the award-winning BSafe crew safety initiative, which features case studies, guidance, videos, and posters focusing on seafarer safety, health, and security. Similarly, The American Club offers information and comprehensive guidance on the award-winning SASH (Sexual Assault and Sexual Harassment) prevention initiative for crew on board, raising awareness within the industry through a series of animations and other resources.
Overall, P&I Clubs have become more indispensable than ever in the modern maritime industry, adapting to the evolving challenges brought by technological advancements and global trade. With rising threats such as crew welfare concerns, cyber security breaches, piracy, and fuel safety issues, P&I Clubs play a pivotal role in safeguarding the interests of shipowners and operators.
The enduring importance of P&I Clubs lies in their ability to uphold the principles of protection and indemnity in an ever-changing and increasingly complex industry landscape. Their continued support is crucial to the success and sustainability of global maritime operations.
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