Self starters - The beginning of mutuality
In the mid-nineteenth century new needs had to be met. Owners needed protection against their liabilities for loss of life and personal injury under the Merchant Shipping Act 1854 and also against the risks not covered by ordinary marine insurance. Because insurance could not legally be effected on a ship or freight beyond the value of such ship or freight, they needed protection for the amount by which the total of liabilities and damage incurred exceeded the value of an insured ship, i.e. excess collision liability. They needed protection against one-quarter of collision liabilities, which London hull underwriters excluded from their policies containing a 'running down' clause. As Lloyd's statistical committee discovered, the number of collisions at sea rapidly increased during and after the introduction of steamers. Unlike sailing ships, which were at the mercy of the winds, steamships steered a narrow course and were vulnerable to collision. Some shipowners were losing sleep worrying about possible ruinous claims on cargoes such as tobacco.
The first of the new mutual was established in 1855. Other associations followed, offering types of cover meeting the needs of their members, who shared the risks of claims in proportion to the tonnage of their ships. A new division of responsibility was emerging, with Lloyd's and the marine insurance companies covering ships and their cargoes while mutual protection clubs insured shipowners' third party liabilities. That the new protection societies were a version of the former hull clubs is shown by the continuation of their calendar. Many ships insured by the mutual hull clubs were laid up during the winter and the traditional date for starting to get them ready for the new sailing season was 20 February. This also became the first day of the insurance year, beginning at noon.
The year in which the United Kingdom Mutual Steam Ship Assurance Association was formed, 1869, was a landmark year in international shipping. The long-awaited Suez Canal was opened, shortening the sea route to India and on to the Far East. Old African ports yielded to enlarged ones in the Middle East, where ranks of whitewashed coal bunkers rose.
What was to become known as the UK P&l Club was formed in comparative obscurity and for its first two years wrote hull and machinery risks. With the addition of other types of cover - protection in 1871 and indemnity in 1886 - and new management, it was to emerge as one of the largest Club's in the International Group, in its 150th year the Club has offices and members around the globe.