P&I

Protection and Indemnity (P&I) insurance is the primary liability cover for the global shipping industry, provided by non-profit mutual clubs rather than commercial insurers. P&I covers shipowners and operators against third-party claims: crew injury and death, cargo damage, collision liability, wreck removal, and environmental pollution. The International Group of P&I Clubs — a London-based umbrella body of 12 Major clubs — collectively covers approximately 90% of global ocean-going tonnage, with total entered tonnage exceeding 2 billion gross tonnes.

P&I clubs operate on a mutual principle: members pay calls (premiums) and share pooled losses. For large claims, the International Group operates a reinsurance pool and excess-of-loss layers in the commercial market. Lloyd's of London and specialist marine underwriters participate in this upper-layer reinsurance. Because P&I is a condition of port entry in virtually every jurisdiction and is required by international conventions (CLC, the Bunkers Convention, Nairobi Wreck Removal Convention), a lapse in P&I cover effectively grounds a vessel.

In the 2026 Iran crisis, P&I availability has become a chokepoint in its own right. OFAC's General Licence U — which authorised P&I clubs to continue servicing Iranian-origin cargoes loaded on or before 20 March — was due to expire at 00:01 EDT on 19 April 2026, with no renewal published after 25 days of Treasury silence. A lapse would push approximately 325 tanker cargoes into legal grey zone, exposing P&I clubs to OFAC secondary sanctions and threatening their ability to cover those ships. Day-one blockade data already showed sanctioned Chinese tankers transiting Hormuz without cover.