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Feature History

The American Club: 100 Years in the Making

Established in 1917 in the midst of WWI, the Club has evolved to be a truly international player in P&I

Shutterstock/ Bart Sadowski

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ome 100 years ago, a piece of legislation enacted in the halls of Parliament (UK) laid the foundation for the creation of The American Club, one of the largest P&I clubs and only one based in the U.S. The Club is a member of the International Group of P&I Clubs, a collective of 13 mutuals that together provide Protection and Indemnity (P&I) insurance for some 90% of all world shipping. P&I provides cover to ship owners and charterers against thirdparty liabilities that they might encounter during commercial operations. In the midst of World War I, Parliament passed, “The Trading with the Enemy Act, 1914,” which made it illegal to conduct business with any person of “enemy character.” That meant anyone doing business with Kaiser Wilhelm’s Germany. The application of law grew during the war and applied even to neutral countries such as the U.S., which had not yet entered the war. “The British authorities looked askance at certain American shipowners—there were just over 80 of them—who they claimed— but many of the owners denied— were still trading with the enemy,” says Joe Hughes, Chairman & CEO of the Shipowners Claims

Bureau, Inc.—the managers of The American Club. In an interview with Marine Log, Hughes reflected on the Club’s 100th anniversary and how it has evolved over that period. “This all meant that a significant portion of the American shipping community, towards the end of 1916 and the early part of 1917, had no P&I coverage available to them from Britain,” says Hughes. At that time, P&I insurance was only available from the United Kingdom or Scandinavia. Essentially, the act pulled the P&I coverage for the American oceangoing fleet [that] was covered by the London Steamship Club. “They informed the American shipowners that they could no longer cover them because they would be in breech of British legislation,” he says. With American shipowners scrambling for P&I coverage, Johnson & Higgins, the largest insurance brokerage in the U.S., snapped into action. Led by Johnson & Higgins’ President William H. LaBoyteaux, the American Club was formed in a relatively short time period on February 14, 1917. It enjoyed the support of the leading U.S. steamship companies. Just about two months later, however, the Club faced its first crisis.

“When America entered the war in April 1917, the U.S. founded the War Shipping Administration, which started to requisition a large number of American ships under the U.S. flag to contribute towards the war effort,” explains Hughes. “It meant that the Club was in danger of losing all of its members because the ships were being pulled into the War Administration from the individual members.” Hughes says LaBoyteaux would have none of that. He went to Washington to persuade the U.S. government to mandate that all U.S.-flag ships in the war effort must be entered with the Club. “They agreed to do it. Effectively, by the end of World War I, all American vessels—between 4,500 to 5,000 all together—were entered into The American Club...by 1918 to 1919 we were possibly the largest P&I club in the world. We had all American shipping.” After the war, the War Shipping Administration withdrew its mandate and The American Club had to compete with its overseas counterparts for market share. The Club grew once again during World War II as it was one of four insurers nominated to provide P&I insurance for ships requisitioned during the war. June 2017 Yearbook // Marine Log 27

Marine Log June 2017  
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