P&I club calls (advance, supplementary and release calls)

A tanker owner receives from its P&I club an invoice of USD 1.9 million for a policy year three years old. It had no claims that year, but the mutual suffered a heavy year of pool claims, and the invoice is a supplementary call. P&I clubs are mutuals, not fixed-premium insurers. They work in three stages. At the start of the policy year, the owner pays an advance call, a fraction of an estimated total call (ETC) computed from the fleet, claims record and general trend. The club can then levy a supplementary call on each open year if claims and costs exceed the budget, up to a percentage of the estimated total or without limit, depending on the rules. Finally, after two or three years, it may offer a release call, a sum fixed once and for all in exchange for which the member is free of any future call on the year. Members theoretically have unlimited liability, that is the principle of mutuality, but the market has added pool reinsurance and excess layers that make a supplementary call rare and measured. In bad years, big pool claims turn into calls, and free reserves cushion the blow. A member who leaves the club remains liable for calls on its open years.