Mutual Companies

There has long been a significant number of mutual companies on the Bermuda register, particularly shipping mutuals, known as Protection and Indemnity (P&I) clubs, whose purpose is to obtain coverage for risks such as hull damage, strike loss, war risks, freight, demurrage and defence. In the early 1990’s there was a resurgence of interest in forming these companies. This appears, in part, to have been driven by tax and securities law advantages that were identified by several leading US law firms.

Over a century ago Mr. Justice Matthew described mutual insurance as "the most laudable and the most excellent way of effecting insurance".¹ These were high words of praise for one of the oldest forms of self-insurance, where the insureds are also the insurers inasmuch as they contribute to the funds required to meet the claims and other expenses of the company.