Answer
Protection & Indemnity (P&I) Clubs operate as non-profit, mutual insurance associations formed by shipowners, charterers, and operators to pool their resources and cover third-party maritime liabilities
Types
1.International Group P&I Clubs- These are the largest and most well-known group of clubs. They operate as a group of 12 clubs, providing coverage to world’s 90% tonnage. Each club operated independently but shares reinsurance arrangements and shares risk with other members of the group.
IG Clubs operate under an unprecedented risk-pooling agreement. Claims exceeding an individual club's retention limit (typically $10 million) are pooled across all 12 clubs. Above the pool limit, the Group purchases a massive collective General Excess of Loss (GXL) reinsurance policy, providing limits up to $3.1 billion for general liabilities and $1 billion for oil pollution.
2.Non International Group P&l clubs- These clubs operate independently of IG group. These cater to smaller markets, the risk covers is not that high as IG group. They offer similar risk coverage but membership requirements, service offerings may be different than IG group P&l clubs.
3.Fixed-Premium P&I Clubs- These clubs require the members to contribute a fixed premium for the P&l Club membership and it preferred by small owners who prefer fixed premium and simple administration.However, policy liability limits are significantly lower than mutual IG clubs.
4.Specialized P&I Clubs: Some clubs may gain expertise in certain kinds of vessels like Coastal ships/ DP vessels etc. and make tailor made coverage for that particular kind of operating shipowners to be their potential members.
Types of P&I Covers/ Classes of P&l-
Class 1- standard P&l covers
Class 2- FD &D ("Freight, Demurrage & Defense")
Class 3- charters liabilities