A footnote to a judgment in a recent decision of a Federal Court in the United States reads: “We are also aware that the ‘P. & I. Clubs’ are still active, that is associations of shipowners spreading and absorbing members’ liabilities”. This article seeks to confirm that the Clubs are indeed still alive and kicking and to outline for those to whom the Clubs may seem somewhat mysterious creatures what it is that they insure and how they are organized internally.

It may help to start with a brief account of the history behind the modern P. & I. Clubs.

The present P. & I. Clubs are the remote descendants of the many small hull insurance Clubs that were formed by British shipowners in the 18th century. These were set up by groups of shipowners, drawn in each case from a small geographical area, who were dissatisfied with the scope and cost of the hull insurance then provided by the two companies who had been granted in 1720 a statutory monopoly which excluded other companies from such business, namely the Royal Exchange Assurance and the London Assurance, and by individuals operating in London from, for example, Lloyd’s Coffee House. These hull Clubs were essentially unincorporated associations, or co-operatives, of shipowners who came together to share with each other their hull risks on a mutual basis, each being at the same time an insured and an insurer of others—still the basic concept of the present P. & I. Clubs, despite the fact that they are now incorporated so that in law it is the Club and not the individual members who provide the insurance.

After the removal in 1824 of the company monopoly in favour of the Royal Exchange and the London Assurance, greater competition had a salutary effect on the rates, terms of cover and service offered by the commercial market and by Lloyd’s underwriters. The hull Clubs became less necessary and went into decline. A few exist today, but their share of the total market is not very significant.

But as the hull Clubs declined, shipowners found the need to create similar associations for a different purpose. The need sprang partly from the steady increase from the middle of the 19th century onwards in the burden upon British shipowners of liabilities to third parties. It became more usual for injured crew members to seek compensation from their employers, and claims by dependants of crew members who were killed were facilitated by Lord Campbell’s Act of 1846. The possibility of claims by passengers was greatly increased by the same Act and by the vast numbers of passengers who constituted the flood of emigrants to North America and Australia in the second half of the century. Shipowners needed cover against these risks. They were also becoming increasingly aware of the inadequacy of the insurance cover that they