Non-pool versus pool reinsurance (part 1)

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 American Club, Britannia and Gard to one of those questions. Over coming days IMN will be printing the responses of other P&I Clubs to this question.

Q: There has been a proliferation of “non-pool” reinsurance purchasing in the commercial markets by the P&I clubs, originally to support the offshore industry and risks relating to oil production, but more lately also in response to the harsh contracting environment in which shipowners of many types now find themselves obliged to accept uneven contracts. Some argue that the pooling system would be a more efficient method of supporting the provision of the required extensions of normal P&I coverage, provided fair and appropriate premiums are charged. What is your position?

American Club:

American Club said that it had always been an energetic supporter of the International Group and the system which underpins it. The ability of clubs to respond to the diverse needs of the maritime community were just one of its strengths. As such, American Club said that Group-based solutions to the changing landscape of P&I risk were to be preferred to “more opportunistic or short-term expedients”. That said, American accepted that there would always be cases where, either through differences of risk appetite within the group or for other reasons, special reinsurances would be required. “To this extent, The American Club will continue to avail itself of specialist reinsurance solutions – as it has done in the past – to respond to particular needs as they arise in the future.”

Britannia Club

Britannia said that pooling remained the most effective and efficient means of providing cover for owners’ needs. However, the Club said that the more fundamental question was whether owners’ needs had grown such that pooling should also grow with it. Britannia felt that the IG’s approach had been, if possible or practicable, to be inclusive rather than exclusive in evaluating risks to be shared, while recognizing that the variety of vessels and their activities had grown over the years as a result of sector/activity-specific technological advances. “At the recent Group meeting in Oslo, the Group managers reaffirmed the benefit of pooling while agreeing to explore extending and optimising the use of the pool to embrace owners’ current and anticipated future needs”, Britannia conclluded


Gard said that offering fixed premium products was a very effective way of providing insurance for risks that were not covered by the pooling agreement. It said that it was one of the leading clubs in the provision of fixed P&I covers for operations that fall outside the pooling agreement, noting that these insurances were offered to support Gard members’ and clients’ operations and were designed to enhance the competitiveness of the fixed P&I market. “On this basis, we believe that fixed premium products are here to stay”, Gard said.

The Club noted that the appetite to pool risks on a mutual basis was the cornerstone of ensuring a continued effective and relevant liability insurance product for the majority of shipowners worldwide, so reviewing whether new risks might be pooled in the future was important. But Gard noted that pooling required clubs that were diverse in size, scale, tonnage composition and risk appetite to agree.