Revisions to the regulations that govern competition between protection and indemnity mutuals are imminent, according to broker Gallagher.
The International Group of P&I Clubs' International Group Agreement (IGA) rules do not allow members to discount on premiums to win business from fellow members. This has led to accusations the International Group operates as a cartel.
Updating the IGA has been a hot topic of discussion among managers of the International Group at their biannual meetings.
Two changes
Gallagher’s most recent P&I report suggests two key revisions are about to be rubber-stamped by International Group members that could be lead to freer movement of tonnage between P&I clubs.
The first amendment, which will apply from the 2020-2021 policy year, will exclude time charter P&I business from the IGA rules.
Unlike shipowners’ P&I business, which is provided on a mutual basis, charterers' cover is provided on a fixed premium basis.
The exclusion of charterers’ cover from IGA rules will apply even if the assured is also a shipowner member of the P&I club concerned.
The second revision is that if an owner is moving a membership from a mutual club that subsequently reduces its deferred call, or makes a return call, then the shipowner's new club can match that reduction.
Consequently, in effect, if a shipowner decides to move club it will not miss out on any of the cash benefits accrued during its time as a mutual member of its former club.
