SHIP MANAGEMENT — INSURANCE & CLAIMS PILLAR

Insurance & Claims Handling — A Complete Working

Guide
P&I, Hull & Machinery, FD&D, and How Cover Actually Gets Claimed

Prepared for: Founding Partners

The fifth and final pillar — companion to the full ship management series
Date: August 2026

How to use this report

This report focuses specifically on insurance and risk transfer — how P&I, Hull & Machinery, War Risk, Loss of
Hire, and FD&D cover actually work, get placed, and get claimed against. It deliberately does not repeat the
commercial claims mechanics (demurrage, speed claims, off-hire, cargo disputes, General Average, bunker
disputes) already covered in depth in our companion Demurrage, Speed Claims & Claims Management
report. It draws on real, current data including the International Group's 2026/27 pooling and reinsurance
structure. Always confirm current terms directly with your broker or club before relying on any figure.
Table of Contents
Executive Summary
Part 1 — Two Different Kinds of Claim
1.1 Commercial Claims vs. Insurance Claims
1.2 What This Report Covers, and What It Doesn't
Part 2 — How P&I Actually Works
2.1 A P&I Club Is Not a Normal Insurance Company
2.2 The International Group and the Pooling Tower
2.3 The Calls System and the February 20th Renewal
Part 3 — The Other Cover Types
3.1 Hull & Machinery (H&M)
3.2 War Risk Insurance
3.3 Loss of Hire Insurance
3.4 FD&D — Freight, Demurrage & Defence
Part 4 — Placing and Renewing Cover
4.1 Selecting a P&I Club
4.2 The Broker's Role
4.3 How Claims History Affects Cost
Part 5 — Claims Administration
5.1 The Claims Process
5.2 The P&I Correspondent Network
5.3 Reserve Setting and Settlement
Part 6 — Certificates and Compliance
6.1 The Blue Card System
6.2 Crew Claims and MLC 2006
Part 7 — Starting Up the Insurance & Claims Function
7.1 Minimum Team and Systems
7.2 The Launch Roadmap
Conclusion
Glossary of Terms
 Insurance & Claims Handling — Complete Working Guide

Executive Summary
This report completes the fifth and final pillar of our ship management series: Insurance & Claims Handling. It
focuses specifically on risk transfer and indemnification — how cover actually gets placed, priced, and claimed
against — and deliberately does not re-cover the commercial claims mechanics (demurrage, speed claims, off-
hire, cargo disputes, General Average calculation, bunker disputes) already built out in depth in our companion
Demurrage, Speed Claims & Claims Management report.

The distinction matters enough to state plainly: a commercial claim is a dispute between Owner and Charterer
over the charter party, aimed at recovering revenue. An insurance claim is a request to an insurer for
indemnification against a loss the ship owner has transferred risk for. They involve different counterparties,
different processes, and — as this report shows — one of them (FD&D insurance) exists specifically to fund the
other.

The core message of this report

P&I insurance is not a normal commercial product, and treating it like one is the most common mistake a
new ship manager makes. It is a mutual system, owned by its own members, built on a genuinely enormous
layered risk-sharing structure most of the industry never looks at closely. Understanding that structure — not
just knowing that P&I cover exists — is what lets a ship manager negotiate entry terms intelligently and
understand what's actually happening when a major claim occurs.

This report draws on real, current data throughout — the International Group's actual 2026/27 pooling and
reinsurance structure, real FD&D cover terms and limits from major P&I Clubs, and the genuinely surprising
history behind why P&I renews on February 20th every year.

This report is organised into seven parts:

• Part 1 (this part) — the distinction between commercial and insurance claims, and an overview of what's
covered
• Part 2 — how P&I actually works: the mutual structure, the International Group, and the
pooling/reinsurance tower
• Part 3 — the other cover types: Hull & Machinery, War Risk, Loss of Hire, and FD&D
• Part 4 — placing and renewing cover
• Part 5 — claims administration: notification, correspondents, and settlement
• Part 6 — certificates and compliance, including crew claims under MLC
• Part 7 — starting up the Insurance & Claims function, and a glossary

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PART 1

Two Different Kinds of Claim

Why this report exists, and what it deliberately leaves out

1.1 Commercial Claims vs. Insurance Claims

It's worth being precise about this distinction before going any further, because the two are easy to conflate
and genuinely require different knowledge, different relationships, and different disciplines.

Figure 1. Commercial claims and insurance claims — different counterparties, different purposes, one funding the other.

Commercial claims run between the Owner and the Charterer, under the terms of the charter party itself.
They're about recovering revenue the charter party says you're owed, or defending against a deduction the
other side says it's entitled to. Our earlier Claims report covered this ground in full depth, with real worked
examples and real arbitration precedent.

Insurance claims run between the Owner (or the ship manager acting on its behalf) and an insurer — a P&I
Club, a Hull & Machinery underwriter, a War Risk insurer. They're about transferring risk that's too large or too
unpredictable to carry alone, and then actually collecting on that transfer when a loss occurs.

The connection between the two is direct and worth understanding from the start: FD&D insurance, covered
fully in Part 3, exists specifically to fund the legal costs of pursuing or defending the commercial claims already
covered in our earlier report. Without it, many genuinely valid demurrage or cargo disputes simply wouldn't be
worth pursuing once legal costs are weighed against the claim value.

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1.2 What This Report Covers, and What It Deliberately Doesn't

Already covered elsewhere (not repeated here) Covered in this report

How P&I insurance actually works — the mutual

Demurrage calculation and claims (Claims report)
structure

Speed/performance claims (Claims report) The International Group's pooling and reinsurance tower

Off-hire claims (Claims report) Hull & Machinery, War Risk, Loss of Hire, and FD&D cover

Cargo shortage/damage claims (Claims report) Placing and renewing cover, and the annual calls cycle

General Average mechanics (Claims report, Claims administration and the P&I correspondent
GENCON/CONGENBILL) network

Certificates of financial responsibility (Blue Cards, CLC,

Bunker quality/quantity disputes (Claims report)
Bunker Convention)

Crew claims and how MLC obligations connect to P&I

ISM Code / SMS / DPA (Safety & QA report)
cover

Table 1. What this report covers, relative to our earlier companion reports.

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PART 2

How P&I Actually Works

The mutual structure, the International Group, and the pooling tower

2.1 A P&I Club Is Not a Normal Insurance Company

Protection & Indemnity (P&I) insurance covers a ship owner's third-party liabilities — crew injury and illness,
cargo damage, pollution, collision liability, and wreck removal, among others. It's the single most important
insurance cover a ship owner carries, and it works structurally unlike almost any other insurance product a new
ship manager will have encountered.

Figure 2. How a mutual P&I Club differs structurally from a commercial insurer.

A P&I Club is a mutual association — owned by its own members, not by outside shareholders. Every ship
owner who enters a vessel with a club becomes a member of that club, with a vote in electing its board. The
club pays no dividends, has no external investors, and takes no commercial profit. Surplus from a good claims
year goes into free reserves, or is used to reduce future calls. This is why premiums in a P&I club are called
"calls," not premiums — the distinction reflects the underlying reality that members are collectively sharing
the actual cost of claims, estimated in advance and adjusted as the year unfolds.

Why roughly 90% of world tonnage stays with mutual clubs

The 12 member clubs of the International Group of P&I Clubs collectively cover approximately 90% of the
world's ocean-going tonnage. Commercial, fixed-premium alternatives exist, but the mutual structure's scale,
century-plus claims-handling expertise, and enormous pooled reinsurance capacity (covered next) are
difficult for a purely commercial insurer to match.

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2.2 The International Group and the Pooling Tower

This is the part of the P&I system most people in the industry have heard of but few actually understand in
detail — and it's worth understanding, because it explains both why P&I cover can be so extensive and why
premiums move the way they do.

Figure 3. The International Group's layered pooling and reinsurance tower for the 2026/27 policy year.

How a large claim actually gets paid, layer by layer

1. Individual Club Retention — each member club retains the first USD 10 million of any claim itself, funded
from its own members' calls
2. The Pool — claims between USD 10 million and USD 100 million are shared across all 12 International
Group member clubs under the Pooling Agreement, spreading the exposure of a very large claim across
the entire mutual system, not just the club that happened to insure the ship involved
3. Hydra — within the Pool, claims from roughly USD 30 million up to USD 100 million are reinsured through
Hydra Insurance Company Limited, the Group's own Bermuda-based captive reinsurer, structured with a
separate segregated cell for each member club so that one club's losses don't touch another's assets
within Hydra itself
4. Market reinsurance (the GXL) — above USD 100 million, the Group Excess of Loss programme provides
roughly USD 2.1–2.35 billion of further cover, arranged across multiple layers with commercial reinsurers
led by AXA XL

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5. Collective Overspill — a further USD 1 billion of cover sits above the GXL for the most catastrophic claims
imaginable

Why this structure matters practically, not just academically

This layered structure is exactly why a P&I Club can offer a shipowner member very high, sometimes
effectively unlimited, cover for pollution and other catastrophic liabilities without any single club carrying
that risk alone. It also explains why a bad year for the whole Pool — a major casualty anywhere in the mutual
system — can affect call rates across every member club, even ones with a clean claims record themselves.
Pool claims activity has been rising again in recent policy years after a relatively benign 2022/23–2023/24
period, which is part of why general rate increases have been a recurring feature of P&I renewals recently.

2.3 The Calls System and the February 20th Renewal

Understanding how and when P&I cover actually gets priced is essential for budgeting and negotiation.

Figure 4. The P&I policy year, and the historical reason it begins on February 20th every year.

How calls work

• Advance Call — set at the start of the policy year, based on the gross tonnage entered, the risk profile of
the fleet (vessel type, age, trade, flag, crew nationality), and the member's own claims history
• Supplementary Call — if claims across the club run heavier than expected during the year, members may
be asked for an additional top-up call to balance the books; some clubs have moved toward a more fixed
"Mutual Premium" system in recent years to reduce this uncertainty
• Release Call — a further payment, set as a percentage of the mutual premium, charged when a member
leaves a club or a policy year formally closes, covering the "tail" of claims that take years to fully develop
and settle

A genuinely useful piece of context for renewal negotiations

P&I renewals have seen general rate increases in most recent policy years, driven by claims inflation, rising
claim severity, and higher reinsurance costs passed through from the GXL programme. Individual clubs

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publish their own general increase percentages ahead of each February 20th renewal — tracking these across
clubs (insurance brokers publish comparison summaries every renewal season) is a genuinely useful input
before entering or renewing with a specific club, not something to leave entirely to a broker's
recommendation.

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PART 3

The Other Cover Types

Hull & Machinery, War Risk, Loss of Hire, and FD&D

P&I is the largest and most complex cover a ship owner carries, but it's not the only one. A complete insurance
programme typically layers several distinct covers together, each addressing a different category of risk.

Figure 5. The five cover types a ship manager needs to understand, side by side.

3.1 Hull & Machinery (H&M)

H&M covers physical loss or damage to the vessel itself — the hull, machinery, and equipment — from perils
like collision, grounding, fire, heavy weather, and machinery breakdown. Unlike P&I, H&M is placed with
commercial insurers on a fixed-premium basis, not through the mutual club system, though many of the same
broking relationships handle both.

H&M is the cover that directly protects the physical condition and value of the asset covered in depth in our
Technical Management report — a vessel that's poorly maintained and suffers a machinery breakdown claim
can find that claim disputed or reduced if the underwriter can show the failure stemmed from inadequate
maintenance rather than a genuinely insured peril.

3.2 War Risk Insurance

War Risk covers loss or damage from war, terrorism, piracy, and related perils — risks specifically excluded
from standard H&M and P&I cover, which is why it exists as a separate class. This is the insurance layer that sits

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behind the War Risks Clause (VOYWAR 2013) and the Piracy Clause we covered in depth in our GENCON 2022
report — those charter party clauses govern who decides whether to enter a war-risk area and who pays the
resulting costs; War Risk insurance is what actually indemnifies the owner if a loss occurs there.

War Risk premiums are often quoted separately for hull and for P&I liabilities, and can change quickly and
significantly when a specific region's risk profile shifts — the Joint War Committee (a body linked to Lloyd's)
maintains and periodically updates a list of higher-risk areas that directly drives additional premium
requirements for transits through them.

3.3 Loss of Hire Insurance

Loss of Hire covers the ship owner's lost charter income during an extended period when the vessel is out of
operation due to a casualty that's also covered under the H&M policy — essentially, it's business interruption
insurance layered on top of the physical damage cover. If a vessel suffers major machinery damage and spends
45 days in a repair yard, H&M pays for the physical repair; Loss of Hire pays for the daily hire income lost during
that downtime, typically after a waiting period (a deductible expressed in days rather than dollars) has elapsed.

This cover connects directly to the commercial side of the business — a vessel earning strong hire in a rising
freight market has a much larger potential Loss of Hire exposure than the same vessel in a soft market, which is
worth factoring into the sum insured selected at each renewal.

3.4 FD&D — Freight, Demurrage & Defence

This is the cover type most directly relevant to everything in our earlier Claims report, and it deserves careful
attention because it's genuinely different in character from the other covers in this part — it doesn't pay for
physical damage or third-party liability at all. It pays legal costs.

Figure 6. FD&D funds the pursuit and defence of exactly the commercial claim types covered in our Claims report.

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FD&D is a discretionary, separate class of cover (often called "Class 6" or "Defence" cover), typically offered by
the same P&I Clubs alongside their main P&I entry, though sometimes through dedicated Defence Mutuals
instead. It covers legal and expert costs for pursuing or defending disputes connected with the ownership,
operation, or commercial employment of the vessel — despite the name, it's not limited to freight and
demurrage disputes specifically; it also covers cargo claim defence, bunker supply disputes, sale and purchase
and newbuilding contract disputes, and crew-related legal issues.

What real FD&D terms actually look like

Club Cost-sharing structure Claim limit

Club covers 2/3 of costs, member bears 1/3 — no

Britannia P&I USD 10 million per claim
initial deductible

Legal costs must be pre-approved; member typically

London P&I USD 7.5 million per claim/series
bears 25% deductible

Varies by dispute; ~75% of

Member contribution capped, minimum deductible
Steamship Mutual disputes resolved in-house
around USD 10,000
without external lawyers

Table 2. Illustrative FD&D terms across major International Group clubs — always confirm current terms directly.

The practical reason FD&D matters so much for a claims-recovery discipline

Go back to the worked demurrage example in our Claims report: a claim worth a few thousand dollars is
barely worth pursuing through formal arbitration once legal fees are counted. A claim worth tens of
thousands very much is — but only if the legal cost of pursuing it doesn't eat most of the recovery. FD&D is
what makes consistent, disciplined pursuit of every legitimate commercial claim economically rational, not
just the largest ones. Most FD&D disputes are, in practice, resolved by the club's own in-house legal team
without ever needing external lawyers or incurring significant cost at all — which is itself a reason to notify
early and use the cover, rather than trying to handle a dispute independently to "save" the deductible.

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PART 4

Placing and Renewing Cover

Selecting a club, negotiating terms, and managing the annual cycle

4.1 Selecting a P&I Club

For a new entrant, club selection is a genuinely consequential decision, and it's worth evaluating on more than
just the quoted call rate.

• Claims-handling reputation and service quality — how responsive and how expert is the club's claims
team, particularly in the regions and trades you actually operate in
• Correspondent network strength in your key ports — covered fully in Part 5, this is genuinely
differentiated between clubs
• Loss prevention resources — many clubs provide genuinely useful technical and safety guidance to
members, which connects directly to the Safety & QA function covered in our earlier report
• FD&D terms and philosophy — as Table 2 in Part 3 showed, cost-sharing structures vary meaningfully
between clubs, and this matters if commercial claim recovery is a priority
• Financial strength and free reserves — a club's ability to weather a bad claims year without excessive
supplementary calls
• Fit with your fleet's trade and vessel type — some clubs have deeper expertise or a larger existing
membership base in dry bulk specifically, which can matter for claims precedent and negotiating leverage
within the Pool

4.2 The Broker's Role

Most ship managers place and renew insurance through a specialist marine insurance broker rather than
negotiating directly with clubs. A good broker brings comparative market knowledge across clubs (including
published FD&D comparison guides, similar to the kind referenced in Table 2), negotiating leverage from
placing business across many clients, and — critically for a new entrant — credibility with underwriters who
don't yet have a track record with your company.

As with the port agents and bunker brokers covered in our Commercial Management report, the broker
relationship is worth building deliberately rather than defaulting to whoever's easiest to reach at renewal time
— a broker who understands your specific fleet plans and risk appetite delivers meaningfully better renewal
outcomes over multiple years than one treated as a transactional annual formality.

4.3 How Claims History Affects Cost

This is the direct financial link back to our Safety & QA Management report, worth stating plainly: P&I call rates
are risk-priced, and claims history is the single biggest input into that pricing. A fleet with a clean claims
record, low Port State Control detention rate, and a strong RightShip Safety Score will consistently renew at

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better terms than a fleet with a poor record — the underwriting logic is the same whether you're being
assessed by a mutual club's underwriting committee or a commercial H&M underwriter.

The compounding effect worth planning around

A weak safety record doesn't just cost money through direct incident losses and RightShip vetting exclusion
(covered in our Safety & QA report) — it also compounds through worse P&I and H&M renewal terms year
after year, since insurers price a fleet's risk based on trailing claims experience, typically over a 3–5 year
window. The safety and insurance functions are not separate cost centres; a strong safety programme is a
direct, measurable insurance cost saving, not just a compliance requirement.

A simple illustration
Scenario Claims record Illustrative renewal outcome

Fleet A Clean, no Pool claims, low PSC detentions Standard or better-than-average general increase

One significant claim in the trailing period, Standard general increase, closer underwriting
Fleet B
average PSC record scrutiny

Multiple claims, elevated PSC detention Above-average increase, possible cover

Fleet C
rate restrictions or higher deductibles

Table 3. Illustrative effect of claims history on renewal terms — actual outcomes depend on many additional factors.

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PART 5

Claims Administration
From incident to insurance payout

5.1 The Claims Process

Figure 7. The insurance claims administration process, from incident to settlement.

Why notification speed is the single most important discipline

Almost every insurance policy — P&I, H&M, FD&D — makes prompt notification a condition of cover, not a
formality. This mirrors exactly the time-bar discipline covered in our Claims report: a genuinely valid insurance
claim, reported late, can be reduced or denied purely on notification grounds, regardless of the claim's
underlying merit.

A well-run Insurance & Claims function has a clear, simple notification protocol that every Master and every
shore-side manager knows without having to look it up: which incidents trigger immediate notification, who
gets notified first, and what initial information needs to be captured before evidence starts to go stale — much
of which draws directly on the Master's paper trail covered in our Claims report (deck logs, engine logs, Letters
of Protest) and the incident investigation discipline covered in our Safety & QA report.

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5.2 The P&I Correspondent Network

Correspondents are local representatives, appointed by the P&I Club in ports and regions around the world,
who provide on-the-ground support the instant an incident occurs — far faster and with far better local
knowledge than a head office thousands of miles away could provide alone.

Figure 8. The P&I correspondent network — local support, coordinated by the club.

A correspondent's practical value shows up in exactly the situations that matter most: arranging a qualified
local surveyor within hours of a cargo damage discovery, understanding which port authority contact actually
needs to be informed first, or coordinating urgent medical care and repatriation for an injured crew member.
Building familiarity with your correspondents in the ports your fleet regularly trades to — before an incident,
not during one — is a genuine, if underappreciated, operational advantage.

5.3 Reserve Setting and Settlement

Once a claim is notified and under investigation, the insurer sets a reserve — its own internal estimate of what
the claim will ultimately cost, based on the information available at the time. This isn't just an internal
accounting exercise; it has real practical consequences for the ship manager:

• A reserve gives an early, if imperfect, sense of the claim's likely scale, useful for the ship manager's own
financial planning and reporting to the owner
• Reserves are revised as more information emerges — a surveyor's report, a medical prognosis, a legal
opinion on liability — so an initial reserve should be treated as a starting estimate, not a final figure
• For claims within the Pool layers covered in Part 2, reserve levels also feed into the wider mutual system's
own financial planning, which is part of why unusually large or numerous claims across the market can
affect renewal call rates even for members with no claims of their own

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Settlement is rarely instant, and that's normal

Complex claims — particularly cargo, pollution, or major casualty claims — can take months or years to fully
settle, especially where liability is disputed or where the claim sits within the Pool and involves coordination
across multiple International Group clubs. A ship manager should build this into cash flow and client
reporting expectations from the start, rather than treating a slow-moving claim as a sign something has gone
wrong with the process.

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PART 6

Certificates and Compliance

Proving cover exists, and where crew claims fit in

6.1 The Blue Card System

Several international conventions require ship owners to carry compulsory insurance for specific liabilities, and
to prove it with an official certificate carried on board. The mechanism for proving that insurance exists is the
same across all of them: the Blue Card.

Figure 9. How a Blue Card becomes an onboard certificate, and why this matters for dry bulk specifically.

How it works
1. The P&I Club issues a Blue Card, confirming the vessel has insurance meeting the relevant convention's
requirements
2. The vessel's flag state verifies this and issues the actual Certificate
3. The vessel carries that Certificate on board, and it's inspected at every relevant port call

The three certificates that matter most

Certificate Applies to What happens without it

CLC Certificate Oil tankers specifically Cannot trade to CLC convention states

ALL seagoing vessels over 1,000 GT — Immediate detention at convention-state

Bunker Convention Certificate
including every dry bulk carrier ports

Wreck Removal Certificate Vessels 300 GT and above Detention risk in convention states

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Certificate Applies to What happens without it

(Nairobi Convention)

Table 4. The three main Blue Card-backed certificates and their scope.

Why this section matters specifically for a dry bulk operation

It's a common misconception that Blue Card certification is mainly a tanker concern, because the CLC (oil
pollution) certificate is tanker-specific. But the Bunker Convention certificate applies to essentially every
commercial vessel over 1,000 gross tons — every dry bulk carrier in a fleet needs one, since it covers
pollution from the ship's OWN fuel oil, not cargo. Missing or lapsed Bunker Convention certification is a real,
binary detention risk for a dry bulk fleet, not a theoretical tanker-only issue.

6.2 Crew Claims and MLC 2006

Crew injury, illness, death, and repatriation claims sit at the intersection of the Crew Management pillar and
the Insurance & Claims pillar, and are worth understanding as their own category.

Figure 10. How crew claims flow from an MLC 2006 obligation into a P&I-covered liability.

The Maritime Labour Convention (MLC) 2006 places clear obligations on ship owners regarding crew welfare
— medical care and continued wages during incapacity, repatriation at the owner's expense when a contract
ends or a seafarer can no longer work, and compensation for death or disability in line with the seafarer's
employment agreement and any applicable collective bargaining agreement. These are not optional extras;
they're baseline legal obligations under MLC.

P&I cover indemnifies the owner for the cost of meeting these obligations — but, as with any P&I claim, this
depends on the underlying documentation being in order. A crew member who was validly entered under the
P&I policy, with a current medical fitness certificate and a properly executed employment agreement,
generates a straightforward claim. Gaps in that documentation — an employment agreement that wasn't

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properly signed, a medical certificate that had lapsed — can create genuine friction in getting a crew claim paid
smoothly, even when the underlying obligation to the crew member is not in dispute.

The direct link back to Crew Management

This is exactly why the documentation discipline covered in a well-run Crew Management operation isn't just
an HR or compliance matter — it's what determines whether a P&I claim for a genuine crew incident
proceeds smoothly or gets bogged down in technical disputes about entry validity. The two pillars need to
share this documentation, not maintain it separately.

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PART 7

Starting Up the Insurance & Claims Function

Minimum team, systems, and a launch roadmap

7.1 Minimum Team and Systems

Figure 11. Minimum viable Insurance & Claims setup — in-house core plus broker and correspondent relationships.

The in-house core

An Insurance & Claims Manager — can genuinely start as a role shared with a commercial or technical
management position in a very small operation, provided the person has real familiarity with the P&I system
covered in Part 2, not just a general insurance background. A Claims Administrator — handles the operational
load of notification tracking, documentation, and correspondence with the broker and club, freeing the
manager to focus on strategic decisions like club selection and renewal negotiation.

What to build through relationships rather than in-house

Function Why build as a relationship, not in-house

Comparative market knowledge and underwriter relationships take years to

P&I / H&M insurance broker
build; use an established broker instead

By definition, local presence in every port you might call at — genuinely

P&I correspondents
impossible to replicate in-house

Average adjuster Independent, specialist expertise required specifically for General Average

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Function Why build as a relationship, not in-house

cases, used rarely but critically

Maritime lawyer For disputes serious enough to exceed FD&D's in-house resolution capacity

Independent assessment of damage or condition — independence from your

Marine surveyors
own team is the point

Table 5. Functions to build through external relationships rather than in-house hiring.

Systems — day one vs. later

• Year 1: a certificate and policy renewal tracking spreadsheet (Blue Cards, CLC/Bunker Convention
certificates, P&I/H&M/FD&D policy documents, renewal dates), plus a simple claims log
• Year 2+: dedicated claims management software, ideally sharing data with the Safety & QA incident log
covered in our earlier report, so a single incident's safety investigation and insurance claim don't live in
two disconnected systems

7.2 The Launch Roadmap

Figure 12. Insurance & Claims Handling launch roadmap.

The sequencing here follows the same logic as every other pillar in this series: P&I entry and basic certification
is a Year 1 necessity, not optional — a vessel simply cannot trade without it. FD&D cover should be added early
too, given how directly it funds the commercial claims discipline that protects revenue from day one. H&M,
War Risk, and Loss of Hire scale up naturally as the fleet under technical management grows and the value at
risk increases.

Conclusion
This report closes the fifth and final pillar of our ship management series. Insurance & Claims Handling is, in
some ways, the pillar most dependent on all the others functioning well: a strong Technical Management

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programme keeps H&M claims manageable; a genuine Safety & QA culture keeps P&I claims history clean and
RightShip scores strong; disciplined Crew Management documentation keeps crew claims straightforward; and
everything covered in our Commercial Management and Claims reports is what FD&D cover exists to fund and
protect.

The throughline across this entire five-pillar series has been the same: process discipline, built early and
genuinely lived rather than merely documented, is what separates a ship manager that thrives from one that's
constantly firefighting. Insurance & Claims Handling is where that discipline gets tested most directly —
because when a real claim happens, whether commercial or an insurance claim, there's no time left to build the
documentation, the relationships, or the understanding that should have been in place already.

Final note to the team

With this report, all five pillars — Crew, Technical, Commercial, Safety & QA, and Insurance & Claims — now
have complete working guides behind them. The next natural step, as flagged when we planned this series, is
pulling the illustrative figures scattered across all of them into one consolidated financial model and business
plan — turning eleven documents into a single, coherent picture of the business.

Glossary of Terms
Terms used in this report that weren't already defined in our earlier companion reports, in alphabetical order.

Term Meaning

The initial estimated payment a P&I Club member pays at the start of a policy
Advance Call
year, based on tonnage entered and risk profile.

A certificate issued by a P&I Club confirming a vessel has insurance meeting the
Blue Card requirements of a specific international convention, used by the flag state to
issue the vessel's actual onboard certificate.

FD&D (Freight, Demurrage & A discretionary insurance class covering legal costs for pursuing or defending
Defence) commercial shipping disputes, separate from P&I liability cover.

The International Group's collectively arranged market reinsurance programme,

General Excess of Loss (GXL)
providing cover above the Pool layer for the largest claims.

Insurance covering physical loss or damage to the vessel itself, placed with
H&M (Hull & Machinery)
commercial insurers on a fixed-premium basis.

The International Group's own Bermuda-based captive reinsurance company,

Hydra providing reinsurance within the Pool layer through segregated cells for each
member club.

An association of 12 mutual P&I Clubs that jointly operate the Pooling

International Group of P&I Clubs
Agreement and arrange collective reinsurance, together covering roughly 90%
(IG)
of world tonnage.

Insurance covering a ship owner's lost charter income during an extended repair
Loss of Hire
period following a casualty also covered under Hull & Machinery insurance.

The International Group's claim-sharing arrangement, under which claims above

Pool / Pooling Agreement
each club's individual retention are shared across all member clubs.

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 Insurance & Claims Handling — Complete Working Guide

Term Meaning

An insurer's internal estimate of a claim's likely eventual cost, set once a claim is
Reserve
notified and revised as more information becomes available.

An additional payment charged when a P&I member leaves a club or a policy

Release Call
year closes, covering the ongoing "tail" of claims still developing.

An additional payment a P&I Club may charge members during or after a policy
Supplementary Call
year if actual claims experience exceeds the original estimate.

A separate insurance class covering loss or damage from war, terrorism, and
War Risk Insurance
piracy — perils specifically excluded from standard H&M and P&I cover.

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