Protection and Indemnity insurance (P&I insurance) provides protection of property and rights of a shipper by covering risks and responsibility which follows ownership or operation of vessels. It has become more important as shipping industry is f...
Protection and Indemnity insurance (P&I insurance) provides protection of property and rights of a shipper by covering risks and responsibility which follows ownership or operation of vessels. It has become more important as shipping industry is facing various environmental changes.
Insurance covering shipping risks incurring on the operator of a vessel is divided into two types – Hull and Machinery, and P&I insurance. Hull and Machinery insurance is about physical damage to ship itself and loss from it, while P&I insurance covers almost all matters related to shipping ranging from cargo damage and casualty to oil pollution. It insures ship owners’ legal responsibility for the mentioned matters.
Historically, P&I Club started from a community of ship owners who wanted to diminish their risks by making a insurance association with other owners. Today, there are two premium system – mutual premium system and fixed premium system. IG Clubs are taking mutual way of premium collection, and Korea P&I Club operates under fixed premium system.
P&I insurance is going through a turning point in recent years. Due to the uneasy circumstances inside and outside of shipping industry, they are likely burden their members resulting in drastically increased P&I costs.
In the midst of the changing environments, P&I clubs have focused on increasing insurance premiums to manage claims and to strengthen their financial basis. However it seems to be excessive to protect their members interest, but rather make them suffer. In this regards, Korea P&I club can appeal ship owners that they impose lower premiums with no need of additional premiums after the year ended.
Korea P&I Club has to take this timely advantage to attract more ship owners in the nation and outside, and review their records to change their system for further development. If it provides more competitive & quality service, it will be a chance to become a long-survived reliable P&I Club.