European Commission ends P&I Club investigation

AUGUST 1, 2012 — The International Chamber of Shipping (ICS), which represents over 80 percent of the world merchant fleet, has welcomed the decision by the European Commission competition directorate to close its investigation into the activities of the International Group of P&I Clubs.

The investigation focused on the International Group Agreement (IGA) and the Pooling Agreement between the P&I Clubs that contain rules on the sharing of insurance claims and joint reinsurance as well as rules on the contractual relationships between the P&I Clubs and their members. The aim of the procedure was to examine whether certain provisions of the agreements lessened competition between P&I Clubs and/or restricted, to a certain extent, the access of commercial insurers and/or other mutual P&I insurers to the relevant markets.

After opening proceedings in August 2010, the Commission conducted a market investigation with shipowners, brokers and commercial insurers. The market investigation was not sufficiently conclusive to confirm the Commission’s initial concerns.

ICS Director of Legal Affairs, Kiran Khosla remarked:
“ICS has always firmly stated that the current system of mutual third party liability insurance provided by the International Group continues to serve the best interests of ship operators and their customers extremely well, alongside serving the interests of claimants and the general public. In particular, the mutual insurance arrangements provided by the Clubs enable the provision of the very high levels of insurance required under international liability conventions, under which compensation to claimants is generally paid regardless of fault and without legal wrangles.”

“We are very pleased that the Commission officials involved now appear to understand the benefits of the current system.” said Ms Khosla.