How Shipping Insurance Really Works During a War
Quotes & Clips
7 clipsP&I clubs are non-profit mutuals pooling shipowner liabilities
“The P&I Club, which means Protection and Indemnity, is a collective. It's a not for profit, accessible mutual association. It's not a commercial insurer, and it basically, historically is a club that brought together ship owners in the industry that we're trying to fill a gap.”
Standard maritime policies exclude liabilities caused by war
“The p and I standard policy excludes liabilities that arise out of war acts. However, there is an excess level of cover that is offered by the P and I club, simply because the standard policies are limited by the value of the vessel.”
War risk cancelations are typically rate resets, not coverage loss
“It's really a cancelation of the rate, not of the cover. Every war policy has a notice a cancelation clause saying basically if a war were to break out, the risk changes, so we cancel the rate you paid, give you three day notice cover... but now after that three days lapses, you have to buy your cover back at a higher rate based on if you're training there.”
Reinsurance allows clubs to cover claims up to billions
“Collectively we ensure ninety percent of ocean going tonnage. The twelve clubs come together every year and they purchase policies... we buy reinsurance collectively with the other clubs up to three billion, so it's fairly unique because they are competitors of ours.”
Human error accounts for the majority of insurance claims
“Our average claim is about twenty or thirty thousand dollars per claim, so it could be a small crew claim or cargo claim. These are the things that add up and determine how a P and I club is operating, not so much the one off big incident. A lot of its human error, not being trained properly.”
Vessel masters hold final authority over crew safety decisions
“Ultimately the decision to do that type of course, is for the master of the vest to decide. It's not, you know, you can't direct him to do something that he believes will put the crew and the ship at risk. That is rule number one.”
The American Club was born from WWI trade restrictions
“The American operators historically were insuring with the London clubs. And then nineteen sixteen, the Americans were not in World War One yet, the UK was. The UK at that time passed what was called the UK Trading with the Enemy Act, which prohibited a lot of American operators from continuing to have their insurance with the UK clubs.”
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