Ship Owners’ Liability Insurance: English Experience Implemented in Russia

Abstract

For historical reasons, Russian insurance companies are vastly borrowing the practices and experience of English Protection and Indemnity Clubs. While in general this process is natural for a much younger shipowners’ liability insurance in Russia and serves to the benefit of the parties, massive citations from English rules sometimes lead to contradictory results and may not always comply with the requirements of Russian law.
English P&I clubs and Russian insurance companies act on different basic principles. P&I clubs are non-for-profit organizations in which member ship owners may to some extent direct the activities of the club. The financial stability of a P&I club is secured by the members’ obligation to make calls (payments) of several types, which size are determined by the club’s directors Russian insurance companies are commercial organizations whose principal aim is to earn profit for their shareholders. The insurance premium is fixed, and so is the limit of the insurer’s liability. Besides, Russian insurance legislation and practice differ significantly from English.
Therefore, a widely used practice of implementing the rules of an English P&I club into a contract between a Russian ship owner and a Russian insurer may not be found appropriate Implementing clauses referring to particular risks (such as liability for collisions, towage and payment of fines) may either directly contradict Russian law, or lead to uncertainties or discrepancies This problem may be partially resolved by establishment of Russian mutual insurance clubs that would act on the same principles as the English P&I clubs. Besides, Russian insurance companies should be more prudent while using English clauses in their rules of insurance.