Page 50 - Insurance Times March 2024
P. 50
India planning own P&I
entiry to safefuard
shipowners
I ndia is looking to have its own protection and technically called a P&I club. While a marine insurance
indemnity (P&I) entity. This will allow shipowners the
company provides cover for hull and machinery to a
shipowners, or cover cargoes; the P&I club provides cover
option to purchase openended highrisk covers
(insurance) that traditional players are generally
reluctant to provide. for openended risks like damage caused to cargo during
carriage, war risk, risks of environmental damage such as
oil spills and pollution, among others.
Senior officials of the Ministry of Ports, Shipping and
Waterways (MoPSW) told businessline that discussions Generally, a P&I club operates as a mutual insurance
around setting up a P&I entity have begun; and over the association that provides riskpooling, information and
next few months, there will be clarity on the structure and representation for its members and the club is operated by
operational activities. Factors like funding and bringing shipowners and charterers, freight forwarders and
onboard insurance service providers are also being looked warehouse operators.
into.
Previous Attempts
We are looking at having a P&I entity which Indian
Instead of an insurance premium, a P&I club member pays
shipowners can have access to. But we need to work on the
a call. This a sum of money is put into the clubs pool. If, at
factors like having a seed fund or some corpus, which the end of the year, there are still funds available in the pool,
perhaps, the Ministry may have to provide in the initial days. each member will pay a reduced call charge the following
However, work is on and over the next few months, there year. But if the club has made a major payout, members
will be some structure to these discussions. But, yes, the P&I
pay a further call to replenish the pool.
entity is important for Indian ships, another official added.
Last year, during the Global Maritime Summit, Union Finance
The fact also remains that the number of Indianflagged Minister, Nirmala Sitharaman called for having an
fleets are relatively low in number compared with global Indiabased P&I entity. She had pointed out that such a move
ones, which is also seen as a deterrent in having such a P&I
will allow Indian vessels greater operational agility and higher
pool system. A larger number of players would also mean
resilience.
lower payout per shipowner or participant.
Market sources say such a move allows Indian ship
P&I Insurance protection against international sanctions. There have been
India currently has no such entity and Indian shipowners instances where it became difficult to get vessels and
have to approach International Group of P&I Clubs for such tankers as well as insure them for shipping crude from
a cover. The International Group of P&I Clubs (based in Russia.
Leadenhall Street, London) comprise thirteenodd clubs,
which provide P&I liability cover for approximately 90 per The closest India came to have a P&I entity was in 2018,
cent of the worlds oceangoing tonnage. when the Staterun New India Assurance Co ventured into
the marine insurance segment and offered protection and
Typically, protection and indemnity insurance is a form of indemnity cover to local vessels that plied on domestic
mutual maritime insurance provided by entities which are routes (within India). (Refer: Business Line)
The Insurance Times March 2024 45
