In its 2017 report on the P&I Clubs, broker Jardine Lloyd Thompson asked all of the clubs a list of questions. Here are the responses of Skuld, Standard Club and Steamship Underwriting Association to one of those questions. Tomorrow IMN will be printing the responses of the remaining P&I Clubs to this question.
Q: Do you consider the mutual P&I system has seen off the threat to its mainstream business that some thought might be presented by the growth of fixed premium P&I insurance capacity in recent years?
Skuld noted that P&I clubs were formed to provide shipowners with both financial security (the “indemnity” part) as well as a high-quality service (the “protection” part). The insurer said that the service element was very important to members. P&I clubs had shown that the service element reduced both shipowners’ costs and time lost. Further, Skuld said, P&I created a “ticket-to-trade” environment, which was even more important for shipowners in a poor freight market, where time lost supressed their income stream. Skuld said that it had established a worldwide network of offices to provide on-the-spot, hands-on service, saying that in its experience this showed that this was the most important reason why Skuld maintained its “very loyal membership”.
Standard Club said that the mutual P&I system still provided excellent value for money and certainty of cover. It accepted that the fixed premium market presented some competition in the small ship sector but said that most IG clubs had responded by creating their own fixed premium facilities. “Fundamentally the IG clubs are aiming to underwrite to break even, whereas the commercial underwriters are looking for a return on capital”, said Standard.
Steamship said that the majority of shipowners were interested in a competitive price and quality service. It said that the mutual system would thrive if it continued to provide what shipowners wanted.