Non-pool versus pool reinsurance (part 2)

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 Japan Club, London Club, North of England P&I Club and Shipowners’ P&I Club 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?

Japan Club

Japan Club said it believed that the pooling system was the most efficient means of providing third-party liability cover for shipowners. It said that sharing risks on a mutual basis required a level of homogeneity not reached by risks covered under extensions of pooling. Japan Club said that IG clubs always tried to be inclusive instead of exclusive when deciding which risks should be shared. The Club noted that “all Group club managers recently reaffirmed the principle of optimising the pool to embrace shipowners’ current and anticipated future needs”.

London Club

London Club said that the pooling system was one of the foundations from which the clubs provided important and efficient benefits for members. It felt that the consideration of any adjustments required a balancing between its effectiveness and value to shipowners now on the one hand – and the developing and other risks referred to in the question on the other. London Club thought it “sensible to look to enhance the utilisation of the system if possible and that could lead to it embracing new risks in some form or another – so long as the review process includes attention to the balancing we’ve just mentioned”.


North of England P&I Club said that the efficiency of the pooling system as a means of providing cover for shipowners’ needs was “not in question”. However, it said that, in considering extensions to the scope of pooling, careful attention needed to be paid to achieving the right balance between responding to shipowners’ requirements “whilst at the same time recognizing the need for the requisite degree of homogeneity of risks shared on a mutual basis”.

North noted that the general philosophy of the clubs had been, where possible/practicable, to be inclusive rather than exclusive in evaluating risks to be shared. However, it accepted that the list of excluded vessels/activities/conduct had grown over the years as a result of sector/activity-specific technological advances. “At recent group meetings the managers reaffirmed the principle of extending and optimizing the use of the pool to embrace shipowners’ current and anticipated future needs wherever possible and beneficial”, North concluded.

Shipowners’ P&I Club

Shipowners’ Club agreed with JLT. It said that clubs should be looking to pool more risks – especially some traditional marine liabilities related to the operation of specialist vessels such as tugs and vessels engaged in the construction and dredging industry.