Table of contents
A. Early Development
The use of marine insurance as a means of providing protection against loss by
maritime perils can be traced back to at least 215 B.C.E. but the origins of marine insurance, as it is practiced today, can be traced back to the 13th century to the merchants of the cities of Lombardy, especially Florence, and of the Hanseatic towns of northern Germany. These merchants travelled far and wide across Europe and influenced the establishment of the London insurance market in the form of the Lloyd’s Coffee House in the 17th century, the first Danish marine insurance company in 1726 and the first Norwegian marine insurance company in 1809.
In the17th century, London had many coffee houses and one of the most famous was owned by Edward Lloyd and was located on Tower Street near the River Thames. Lloyd’s Coffee House attracted the patronage of people that were interested in, and had connections with, the sea since it proved to be a convenient, congenial place for merchants that had common interests to meet to conduct commercial transactions. As time went by, Lloyd’s Coffee House became known as the place where marine underwriters could be found, and in 1696 Edward Lloyd began to publish a newssheet called Lloyd’s News which was the forerunner of Lloyd’s List which first appeared in 1734. Marine insurance was provided by individuals, who came to be known as underwriters, since they wrote their names and signatures beneath the wording of the insurance policy, and thereby provided a personal guarantee for a commercial venture.
The first major marine insurance companies were established in the early 1700’sfollowing the bursting of the infamous South Seas Bubble.1 However, these companies underwrote only the safest risks on very restricted cover and charged extremely high brokerage fees. Consequently, the scope for private individuals to continue to practice marine insurance was not restricted to any great extent.
However, at about the same time, a number of the shipowners that carried on business in ports other than London banded together in order to establish hull clubs that provided insurance cover for physical damage to the ships of their members on a mutual basis, i.e. each member of the club agreed to bear a share of the total risk that was run by all of the ships that were entered in the club. However, this mutual system tended to work to the disadvantage of good shipowners in that it required them to subsidise other less careful shipowners. By comparison, Lloyd’s underwriters were generally able to quote better insurance terms and rates for individual ships and owners and to provide better claims administration, facilities and organisation. Consequently, the more responsible shipowners tended to insure their vessels with Lloyd’s whilst the hull clubs were left to insure those ships that individual underwriters were not prepared to accept. Consequently, hull clubs declined in importance.
Before the second half of the nineteenth century, the scope of marine insurance was largely restricted to the protection of property risks in hull and cargo since ship ownership and operation did not at that time attract the degree of liability that is now commonplace. Therefore, liability for damage caused to another vessel as a result of a collision was not recoverable under the standard policy of marine insurance that was then in use in the London market. However, the decision of the English court in the case of de Vaux v Salvador in 1836 demonstrated that a large claim of this nature could easily bankrupt a shipowner. Consequently, policy terms were extended to cover not only physical loss or damage but also the liability of the shipowner. Insurance cover was made available for three-quarters of a shipowner’s liability for collision damage leaving the shipowner exposed for the remaining quarter, presumably in order to encourage those shipowners to exercise due diligence to avoid collisions.
Furthermore, the increased liability exposure that resulted from the implementation of the British Fatal Accidents Act 18462 and subsequent statutes caused considerable concern to shipowners and resulted in the founding in 1855 of the first mutual protection club, the Shipowners’ Mutual Protection Society (now the Britannia Steam Ship Insurance Association Limited) which was the offspring of one of the early hull clubs. However, the rules of the Society provided cover only for limited risks, namely, for the shipowner’s liability for death and personal injury claims, for the one-quarter collision liability that was not covered by the hull insurers and for excess collision liability, i.e. collision liability that was in excess of the sums insured under the hull policy.
Shipowners did not at that time need insurance cover for cargo liability since they were able to rely on wide-ranging exemption clauses in their contracts of carriage to escape liability. However, in 1870, the sinking of the WESTENHOPE caused them to reconsider since her owners were not allowed to rely on the protection of such exemption clauses following a deviation during the course of the voyage, and her owners were held to be liable in full for the loss of the cargo. As a result, the first indemnity club was established in1874 in order to provide insurance cover for liability for loss of, or damage to, cargo, then known as an indemnity risk. The protecting societies subsequently amended their rules to enable them to provide such indemnity cover, and consequently, became known as protection and indemnity (P&I) clubs.
Thereafter, the scope of cover that is provided by P&I clubs has steadily expanded exponentially in response to the increasing need that shipowners have had to obtain insurance cover for liabilities to third parties and for expenses that are not insured under standard Hull & Machinery and other marine policies. Therefore, during the early part of the twentieth century, the various P&I clubs also began to offer Defence cover in response to their members’ need for insurance cover for legal costs incurred by them in pursuing or defending claims that were not otherwise covered by the rules. The clubs also started to provide sophisticated advice and claims administration services to their members for P&I and many non-P&I matters, something that other profit-making insurers did not do.
Consequently, by the beginning of the 20th century, P&I clubs provided cover for a wide range of legal liability that the assured might have to third parties, and for expenditure arising as a result of, inter alia:
However, it is important to remember that P&I cover is ’itemised risk’ cover, i.e. cover is available only for the specific risks that are itemised in the club’s rules. Such cover is provided by P&I clubs on a mutual, non-profit making basis. This means that each member of the club agrees to share the risks that affect the other members of the club and agrees to contribute the funds that are required to meet the claims that may be made against any member of the club during the policy year. Consequently, cover is made available only for those risks that are regularly and commonly encountered by the majority of the membership since these are the risks that each member has agreed to share. Such losses and liabilities may be onerous, as proved by the various pollution cases referred to in footnote 4 below, but, nevertheless, since they are the result of risks to which members are routinely subjected as an integral incident of their everyday shipping activities, members agree to share such risks between themselves. Liability for the majority of such risks is normally unavoidable under the provisions of international or national compulsory laws or may be commercial risks that most members are unable to avoid. However, the concept of mutuality and the readiness of members to underwrite the losses and liabilities of other members does not stretch to cover losses and liabilities that are the result of activities that attract greater risk than that which is routinely run by the majority of members particularly if such risks are the result of contractual terms or practices which the majority of members consider to be unwise. For example, if a member incurs a liability that arises solely as a result of contractual terms that are not commonly and regularly used by the majority of the membership, such risks would normally be excluded from cover unless they have first been approved by the club.
Similarly, members are expected and required to make full use of whatever rights they may have to exclude or limit their liability in order to protect the common funds of the club and its membership. Finally, clubs will also normally exclude risks that are preventable and which can give rise to very costly claims such as the liability that shipowners may face if they have delivered cargo without surrender of the original bills of lading to the wrong party and the liability of cruise operators for personal injury to passengers incurred whilst travelling on an aircraft to join a cruise.
Traditionally, P&I clubs have provided insurance cover on the mutual, i.e. nonprofit making, basis described above. Each member agrees to share the risks and claims that are borne by other members and agrees to contribute the funds that are necessary to finance compensation of such claims. Consequently, if the funds that are initially contributed by each member do not prove to be sufficient to cover claims, each member is contractually obliged to contribute further funds as and when required.
The mutual nature of P&I insurance enables clubs to be more flexible than profitmaking market insurers in the manner in which they can provide cover. One important example is the ’Omnibus Rule’ which gives the club the discretion to cover risks that do not fall expressly within the expressly itemised cover but which, in the opinion of the club, are incidental to the operation of an insured ship and which fall broadly within the scope of club cover. Such discretion is exercised by the board of directors of the club who are themselves members of the club and who, therefore, have the knowledge and experience to evaluate and decide on behalf of their fellow members whether cover should be afforded in the particular circumstances.
However, mutuality also has the consequence that if claims during any particular policy year prove to be higher than originally anticipated, the members must contribute whatever additional funds that may be necessary to cover such increased liability.3 Therefore, despite the fact that P&I club managers are very experienced in assessing likely trends and in responding to them before they occur by assessing in advance the funds that are likely to be required during a policy year, members need to be aware that unexpected events or unexpectedly high losses may occur and that the club may require additional funds. Since the ability of P&I clubs to borrow funds is limited and they do not have third party owners who can inject additional equity capital, the only way in which such additional funds can be obtained is by calling on members to comply with their obligations to contribute such additional funds, known as additional calls. However, since the claims records of clubs may differ, the level of any additional calls that may be required from the members of clubs may also differ.
Furthermore, the boards of directors of individual P&I clubs have traditionally had some flexibility in the manner in which they can assess the level of original and any additional contributions that may be required from members. Therefore, in any particular policy year, the additional contribution that may be required from the members of one club may be more or less than the additional contribution that is required from the members of another club. This is particularly so since different clubs, albeit all members of the International Group of P&I Clubs (IG), apply different solvency and risk-acceptance management strategies. The members of some clubs have accepted a lower solvency margin and, consequently, a correspondingly higher risk of additional calls, whereas the members of other clubs prefer to operate with contingency reserve levels that result in a much lower probability for additional calls. Therefore, it is not just the claims records of the clubs that differ, but also their capitalisation relative to their underlying risk exposures.
However, as from 2016, the degree of flexibility that club managers have in this respect has been curtailed by the introduction of the Solvency II Regulations for insurance companies in Europe, and the introduction of similar regimes in other jurisdictions such as Bermuda. Such new regulations mean that most of the P&I clubs that are members of the International Group (see C. below) are subject to laws that regulate risk-based solvency and capital requirements. They will be obliged to comply with Minimum Capital and Solvency Capital requirements that establish the minimum capital that each P&I club has to hold on its balance sheet in order to ensure that it has a sufficiently large capital buffer to enable it to withstand claims or other financial shocks. Accordingly, the freedom that each P&I club has traditionally had to decide for itself the strength of its balance sheet and to rely on supplementary calls to recapitalise if and when needed, is now far more restricted.
C. The development of the Pooling Agreement
The Pooling Agreement has its origins in the 19th century. Traditionally, P&I cover had been unlimited and the clubs had been able to compensate their members in full (subject to any deductible) for insured claims. However, members became fearful at the end of the 19th century that this source of comfort was becoming unsustainable. Consequently, the so-called ’London Group of P&I Clubs’, which at that time consisted of six clubs, entered into their first claims sharing agreement in 1899. The principal purpose of that agreement was then the same as is today the purpose of the Pooling Agreement: It constituted the legal framework for sharing on a mutual basis the financial burden of large claims between the participating clubs so as to reduce earnings volatility arising as a result of their respective exposures to such claims. It also included mechanisms that were designed to determine how much each participating club should contribute to claims that were brought by the other clubs. In so doing, it reduced the probability that the participating clubs would suffer a financial loss in any given policy year that would necessitate the levying of calls on their members in excess of the estimated total call for the year.
From 1951 the Pooling Agreement also became the framework that enabled the participating clubs to purchase excess reinsurance cover from the commercial reinsurance market on a collective basis. The cost-effective ’bulk buying’ of high levels of reinsurance cover, combined with the (then) unlimited obligation of the members of individual clubs to pay contributions toward truly catastrophic, but highly unlikely, claims in excess of the market reinsurance cover, made it possible for the shipowner-controlled, mutual clubs to provide unlimited cover for liabilities arising out the operation of their members’ ships.
However, the second half of the 20th century saw a quantum leap in the importance of the role that P&I clubs had to play in order to meet the challenges of the increasingly more complex nature of shipping operations. Perhaps the most startling and innovative development has been the ’container revolution’ which has enabled carriers to collect and deliver cargoes at inland locations far removed from the coast. Such carriers often assume responsibility not only for the sea leg of the carriage but also for that part of the carriage that has been performed by road, rail or river carriers to or from the loading or discharge ports. Consequently, such members incur liability that has been caused by risks and factors that are very alien to traditional seaborne risks and factors.
The world community has also begun to appreciate that the environment in which we live is fragile and that whilst it is important to ensure that ships continue to transport the food, energy and other products on which we all rely daily, it is also important that the environment is not harmed in the process. The damage that has been caused by a number of high-profile pollution cases4 has attracted the attention of national, regional and international regulators and has resulted in the imposition of stringent laws that require ships to be operated to the highest standards. Such laws have also required polluters to provide very high levels of compensation to individuals and governmental bodies that have suffered as a result of any breaches.
Similarly, the courts of many countries have imposed very high levels of compensation liability for personal injury and death, particularly in the case of farepaying passengers. This has resulted in the imposition of similar international laws that are designed to ensure that ships provide a safe and satisfactory leisure and working environment for passengers and crew members respectively and require transgressors to provide very high levels of compensation to individuals that have suffered as a result of any breaches.
Because of such varied developments, the owners and operators of ships have been obliged to demand a greater scope of cover from P&I clubs and the clubs have wished to try to accede to such requests. However, as a result of the very high pollution claims that arose in the 1970’s and 1980’s, it became clear that the International Group clubs did not have the financial strength to compensate their members in full should a number of such incidents arise during a policy year. Therefore, it became necessary to place a cap on the cover for oil pollution liabilities. Initially, the cap was fixed at the sum of USD 15 million per incident which was just above the amount to which shipowners could limit their liability under the CLC. However, it subsequently became necessary to review and increase such a cap substantially due to the fact that shipowners’ right to limit their liability was increasingly being eroded so that, in an increasing number of cases, shipowners were either not able to limit their liability at all, or were made subject to much higher limits. Furthermore, countries began to require the owners of ships that traded to their countries to produce evidence that they had sufficient insurance cover for their potential liability for such claims.
Notwithstanding the protective measures that were taken by P&I clubs to limit their exposure to such large claims, the potential liabilities were, nevertheless, so great that no one P&I club felt able by itself to provide the necessary cover for its members. Consequently, most of the clubs agreed to impose a general limit of cover in order to ensure that they could withstand the shock of a single, catastrophic claim and to cooperate with each other in order to provide their individual members with very high levels of cover and to share (pool) liabilities, losses, costs and expenses.
The Pooling Agreement establishes the legal framework upon which claims are shared between the clubs that are parties to the Agreement, and is the vehicle for the collective purchase of market reinsurance cover. Apart from the quantum of the cover, the terms of the cover that is available under the Pooling Agreement mirror to a large extent those of the cover that is provided by the individual clubs to their members and is provided on a tier basis. Each club agrees to bear claims brought against it by its own members up to an agreed total (its retention) and the other clubs that are parties to the Pooling Agreement agree to contribute proportionately the additional funds that are necessary to cover the balance of the claim. However, if a claim, i.e. an overspill claim, exceeds the upper limit of the cover that is available under such reinsurance, the balance is then payable by the members of each club, which club may require its members to pay one or more additional Overspill Calls5 up to a stated maximum amount. If the claim still exceeds that maximum amount the balance must be borne by the particular member that has suffered the claim.
The Pooling Agreement is an annual agreement that is renewed each policy year. This means that no IG club is bound to be a party beyond the policy year for which the Agreement is in force and may in principle elect to withdraw upon renewal of the Agreement. Furthermore, amendments to the Agreement are effective only from the beginning of the next policy year but special mechanisms make it possible to amend the Agreement during a policy year if needs be.
D. The development of the International Group and the International Group Agreement6
The ability of P&I clubs to co-operate to share the burden of claims has been facilitated by the fact that whilst the rules of individual P&I clubs differ to some extent, the scope of cover that is provided by each club is broadly similar. Although such co-operation had originally been restricted to the UK based P&I clubs that had formed the London Group, that group was subsequently renamed the International Group when non-UK-based P&I clubs such as the Scandinavian clubs and the Japan Club became indirect members through reinsurance arrangements. Consequently, the IG was established in 1981 and obtained observer status at the International Maritime Organization (IMO) at the same time. It also quickly became clear that if individual clubs were to co-operate in this manner, it would be necessary to do so on the basis of a formal agreement called the International Group Agreement (IGA) that set out the terms upon which such co-operation would be done.
Currently, 13 P&I clubs are members of the IG and collectively provide liability insurance for more than 90 per cent of the world’s ocean-going tonnage and more than 95 per cent of the world’s ocean-going tankers. The current members of the IG are:
The rights and obligations inter se of the clubs that are members of the IG are regulated by the Constitution of the IG but the daily work of the IG is administered by a Secretariat based in London which gives support to the many club representatives that serve on the various IG sub-committees and workinggroups. However, it is important to remember that IG policy is not determined independently by the IG but by the shipowner members of the individual clubs acting through the medium of their boards.
The main functions of the IG are as follows:
A key aim of the IGA is to establish quotation procedures that are designed to safeguard the inter-club discipline that is necessary to ensure the proper operation of the Pooling Agreement. It contains self-imposed competitive restraints which aim to avoid the undercutting of rates that may lead to the under-pricing of risks that affect the financial viability of individual clubs and the wider Pool. Therefore, the Pooling Agreement places restrictions on the ability of individual clubs to compete in terms of premium price, or the premium rating as it is called, when a ship is transferred from one club to another. Furthermore, the quotation procedures are supplemented by provisions that are designed to increase transparency by requiring the disclosure of the level of administration costs of each club.
If a club that is a party to the IGA fails to comply with the provisions of the IGA it may lose the ability to claim contributions under the Pooling Agreement in relation to the ships that were the subject of the non-compliance. The offending club may lose the right to claim contributions from the other clubs that are members of the Pooling Agreement and the ability to claim under the Group’s Loss Reinsurance Cover up to a total of USD 150 million for a period of two years should a committee consisting of representatives of the other clubs so decide.
Ever since the 1980’s the IG and its agreements have been subject to regulatory scrutiny by the EU competition authorities. In 1985, the EU authorities confirmed that the International Group Agreement was exempt from the otherwise prohibitive EU competition provisions since the Agreement was recognised to be indispensable for the operation of the Pooling Agreement, which, together with the clubs’ claims handling practices, was considered to be of great benefit to consumers by ensuring the availability of effective compensation mechanisms. A renewed exemption was granted for ten years running from 20 February 1999 and the current position is that, following regulatory changes, the IG is allowed to operate without applying for exemptions, but is under a duty to self-assess and report vital aspects of the business to the EU competition authorities on an annual basis.
E. The development of compulsory insurance requirements
Over the last half century or so there has been a rapid increase in the number of circumstances in which national and international regulatory authorities have imposed strict liability on ship operators subject to a maximum limit and have obliged ship operators to prove that they have adequate insurance to cover such liabilities before they are allowed to trade freely. Such regulations also normally oblige the liability insurer that provides such cover to submit to direct liability to the third party claimant. This ‘package’ was originally conceived in relation to the liability of shipowners for pollution damage under the Civil Liability Convention (CLC) 1969 but has been extended thereafter to other pollution conventions such as the CLC 92, the Hazardous and Noxious Substances Convention 1996 (HNSC) and the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the Bunkers Convention). Consequently, P&I clubs, who are the predominant pollution liability insurers, are now required to provide certificates of compliance confirming that the relevant ship has the required insurance cover and that the liability insurer is directly liable to the claimant.
The requirement that there be compulsory insurance has subsequently been extended to other areas of shipping activity. Article 4bis of the Convention Relating to the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention) now has similar requirements as do section 2 of US Public Law 89-777 and the EU Passenger Liability Regulation (EC) No 392/2009 which have provisions to the same effect for the purposes of US and EU law respectively. Furthermore, the Nairobi Convention of 2007 (The Wreck Removal Convention) requires ships to maintain insurance or some other acceptable form of financial security to cover liability under the Convention for wreck removal.
The P&I insurance that is provided collectively by the IG clubs has very high limits of cover for such liabilities and is considered to be an extremely reliable form of security. Consequently, the so-called ’blue cards’ that are issued by the IG clubs as evidence that the “insurance or other financial security” that is required by the compulsory insurance requirements of such international conventions are accepted as sufficient evidence of compliance by the countries that are contracting parties to such conventions. Therefore, in reliance upon these ’blue cards’, such contracting states are then prepared to provide shipowners with the certificates that are acknowledged to be the formal evidence of the “insurance or other financial security” that is required by such conventions. However, the P&I clubs that are members of the IG have been less ready to provide similar ’blue cards’ for liabilities that arise under purely national or regional regulations since it is believed that liabilities should be determined and regulated by international conventions that have been developed under the aegis of the IMO. Consequently, such clubs have not been prepared to provide ’blue cards’ for liabilities that arise under the Oil Pollution Act 1990 of the USA (OPA 90), but have been prepared to do so for liabilities that arise under the EU Passenger Liability Regulation (EC) No 392/2009 since such regulation mirrors many of the requirements of the 2002 Protocol to the Athens Convention.
The current compensatory framework that is based on the ability of the IG clubs to guarantee payment of claims is very advantageous to claimants in that it facilitates the rapid settlement of high level claims. This is one of the reasons why the European Union has been prepared to exempt the IG from a strict compliance with the otherwise prohibitive EU competition provisions. However, the readiness of the clubs to provide such comfort is based on the premise that the shipowner is able to rely on a virtually unbreakable limit of liability and that the required insurance and the liability of the insurer is capped at the same figure, i.e. on a delicate balance. However, in recent years, attempts have been made by the European Union to undermine the concept of limited liability and thereby expose liability underwriters to the risk of unlimited liability. Should such attempts be successful the IG clubs may have to reconsider their ability to continue to provide such comfort.
F. The development of the ’one-stop shop’
Traditionally, P&I cover has been subject to a number of exclusions based on the rationale that, since P&I insurance is mutual insurance, the membership as a whole should not contribute to risks that are not borne by the membership as a whole but only by some members who choose to run additional or non-standard risks such as delivering cargoes without surrender of the original bills of lading. However, such exclusions have caused difficulty since more and more shipowners have found that they are obliged for commercial reasons to run risks for which they can either find no cover at all, or only cover at high premium cost. Therefore, Gard has over decades developed insurance solutions for risks that cannot be covered by the Standard P&I Cover, and offers several additional covers tailored to the provision of protection against such risks. Such cover is provided on an additional fixed premium basis.7 Initially spurred on by the desire to innovate coupled with the increasing complexity of shipping activity and the increasing demands that are made on insurance providers to provide a fast, efficient and competent service, Gard became increasingly keen to explore whether it could develop an insurance service that could transcend the difficulties that can often arise as a result of the historical divergence between different insurers such as hull and machinery, P&I, war risks etc. Therefore, when in the late 1990’s, a ’once in a lifetime opportunity’ arose due to structural changes in the Nordic insurance market, Gard was ready to grasp the opportunity. The marine, energy and property insurance portfolios of various Nordic insurance companies were acquired by a new property and casualty insurer called If P&C Insurance Ltd (IF) which had been jointly established by such companies. However, IF’s total insurance portfolio was weighted in favour of land-based risks and the marine and energy business was considered to be a rather specialised non-core business with a low frequency/high severity risk. Gard saw an opportunity to significantly expand its marine and energy market presence by offering to manage this business for and on behalf of IF. Consequently, IF and Gard established the jointly owned insurance services company Gard Services AS with effect from July 2000.
This development benefitted Gard since it increased the volume of business over which costs could be spread and it enabled the management to develop new insurance products and services that would meet the changing requirements of the shipping industry. The new company created cross-functional teams that blended P&I and marine experience in relation to both underwriting and claims handling and consequently, offered a service that could address an increasingly wide range of client needs that covered damage to assets, loss of income and third party liability. The success of the venture, achieved by operational synergies and prudent risk management, resulted in increased financial strength to the benefit of all members of the Association.
However, although Gard now managed this new portfolio, it did not own it, and this hampered the desire for expansion and growth. Consequently, when plans were made for IF to have stock market listing and it became apparent that it wished to dispose of the marine and energy portfolio, Gard took the opportunity to acquire it. Ultimately, Gard did so and established a new company: Gard Marine & Energy Ltd in Bermuda in early 2004, part owned by Gard P. & I. (Bermuda) Ltd., with IF holding a minority share. Less than 18 months thereafter, Gard acquired all the shares in the company from IF and for the first time, a mutual P&I association had full ownership control of a commercial marine insurance company. This represented something new in the world of mutual P&I clubs and several other clubs have since expanded and diversified their business in similar ways, but not perhaps to the same extent.
Consequently, it can truly be said that P&I clubs are complex and evolving organisms that provide much of the lubrication that enables shipowners and operators to provide the transportation service that the modern world requires whilst at the same time protecting such owners and operators against losses, additional expenses and liabilities that could make it impossible or difficult for them to do so. Therefore, the role that P&I clubs play has universal importance not just to those that operate ships but also to the ordinary man and woman in the street.
1. The South Sea Company was a British joint-stock company founded in 1711 which was granted a
monopoly by the government for trade with South America. The expectation of huge wealth encouraged many investors to buy shares which caused the share value to increase enormously. However, in reality,
there was no hope of profit since Britain was then at war with Spain which controlled South America.
The founders of the scheme had, in effect, engaged in insider trading as it is called today and made
large fortunes whilst most ordinary investors were ruined. As a result of these events, the British
government introduced the Bubble Act which sought to prevent the establishment of fraudulent jointstock
2. This Act came into being due to the rapid increase in the number of fatalities that resulted from the
introduction of railways in the United Kingdom. The Act gave the personal representatives of the
deceased the right to bring an action against the wrongdoer for the benefit of the deceased’s family
3. P&I clubs normally try to manage their finances in such a way that any surplus funds in any policy year
can, if necessary, be allocated to contingency reserves that can, consequently, be called upon in future
years in order to avoid the need to make additional calls on members. However, clubs need to be careful
and responsible when considering whether to use reserves in this way since they have a responsibility to
members to ensure that the club’s finances remain healthy over more than one policy year.
4. Such as the TORREY CANYON in 1967, the AMOCO CADIZ in 1978, the EXXON VALDEZ in 1989, the
SEA EMPRESS in 1996, the ERIKA in 1999 and the PRESTIGE in 2002.
5. The collection of Overspill Calls are subject to special rules. See the Guidance to Rule 18.
6. Further information is available on the IG website: http://www.igpandi.org .
7. Details of the extended covers that are provided by Gard can be found on the Gard website at: http://www.gard.no/ikbViewer/web/products .