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.
At the turn of the new millennium, the shipping industry continued to change. In 2004, the ISPS code came into effect, a comprehensive set of measures to enhance the security of ships and port facilities, developed in response to the perceived threats to ship and port facilities in the wake of the 9/11 attacks in the US. 26th November 2004, Athos I struck a large anchor submerged in the Delaware River. The impact punctured the tanker’s hull leading to an oil spill. The Club continued to evolve in the new millennium, with UK Clun (Europe) established in 2007. In 2008, the club raised $100 million of new capital through Hybrid Capital, a first for mutuals.
UK Club Japan Branch opened its doors in Tokyo in 1989. The Exxon Valdez oil spill occurred in Prince William Sound, Alaska on 24th March 1989, the US Congress passed the Oil Pollution Act of 1990 in response. The UK Club began regionalising its claims and advisory service offerings in the late 1980s, continuing throughout the 1990s. This was a groundbreaking initiative for the Club, taking the service to the Member’s time zone to better understand and manage their risk.
1967 and the UK P&I Club reaches a landmark 30 million entered tonnage. In the same year, the TORREY CANYON ran aground on the Scilly Islands (SS Torrey Canyon was an LR2 Suezmax class oil tanker with a cargo capacity of 120,000 tons of crude oil. She was shipwrecked off the western coast of Cornwall, England, on 18 March 1967, causing an environmental disaster. At that time she was the largest vessel ever to be wrecked). In 1969, The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited was established.
The first reinsurance contract is placed on 20 June 1951, running until February 1952. In 1955, former trucking company owner Malcom McLean worked with engineer Keith Tantlinger to develop the modern intermodal container. The challenge was to design a shipping container that could efficiently be loaded onto ships and would hold securely on long sea voyages. The result was an 8 feet (2.4 m) tall by 8 ft (2.4 m) wide box in 10 ft (3.0 m)-long units constructed from 2.5 mm (0.098 in) thick corrugated steel. The design incorporated a twist-lock mechanism atop each of the four corners, allowing the container to be easily secured and lifted using cranes. After helping McLean create the successful design, Tantlinger convinced him to give the patented designs to industry; this began international standardization of shipping containers
By 1938, the membership of the UK Club was still predominantly British, about 55 per cent by numbers of ships, but there was strong US (12%), and Greek (10%) presence in the Club. The second world war ravaged the globe between 1939-1945.
In 1924, the Hague Rules entered into force (formally the "International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, and Protocol of Signature"). The international convention sought to impose minimum standards upon commercial carriers of goods by sea. The passing in 1927 of the Longshoremen's and Harbor Workers' Compensation Act, for which P&l clubs through lawyers had lobbied the US Congress, led to a more equitable settlement in many cases and fewer undesirable lawsuits.
The now invaluable Panama Canal was first opened on 15th August 1914, overshadowed by the declaration of war in Europe 11 days prior. After four years of unimaginable devastation in Europe and across the globe, the Great War came to an end. Around 9 million tons of British shipping, almost half the pre-war fleet was lost during the war. As the nation returned to peace, there was a demand for shipping of all kinds, with congestion at ports. There was also “an alarming increase” in the claims for cargo losses through pilferage. Another legacy was the loss of experienced seafarers, who in a time of no separation lanes knew their routes. Their loss partly explains the comparatively high number of immediate post-war collisions. Personal injury claims were also rising,
At the turn of the century, over 1 million tons were entered in both the protection and indemnity classes of the UK Club. Lord Walter Runciman (Chairman 1909-1937) of Moor Line takes over as Chairman. Sir Walter Runciman was a Director of the Club for 40 years. He began his career as a deckhand and founded Moor Line.
On 8th July 1892, The directors accepted the new tank steamer – Murex into the Club. The Murex was part of the fleet of M. Samuel (later Shell) The 3,564 ton Murex was purpose-built in 1892 and the first bulk oil tanker to meet new regulations for passing through the Suez canal. In 1899, the Club stopped insuring hulls due to diminishing business and focussed on pure P&I. In the same year, the UK Club joined with five other clubs in their first reinsurance link – a Club pooling agreement.
Thomas Miller, a shipowner through the firm of Chapman & Miller, was appointed Manager of the UK P&I Club in 1885.
Tramp steamers, such as the 700 ton ‘Ban Righ’, were typical of the first ships entered in the Clubs early years.
Foundation of the UK P&I Club
William Leetham of Bailey & Leetham was appointed the first-ever Chairman of the UK P&I Club, serving in his role until 1875.1869 also saw the opening of the Suez Canal and the launch of the Cutty Sark.