Source: Business Standard
“At a recent roundtable of financers and insurers, the ministry deliberated on the way forward for the setting up of this club,” the official said. Another official said that stakeholders are awaiting more financial and regulatory clarity.
The shipping ministry, on February 14, conducted a stakeholder meeting on shipbuilding, financing, and insurance. Here, representatives from insurance firms had expressed their intent to participate in the sector.
“The idea is to start small. We are looking at a small corpus through a mutual insurance association of shipbuilders, shipping operators, and general insurers,” the official said. Several coastal and riverine vessels are not covered under the P&I framework, as they operate in domestic waters. So, the local club will initially focus only on such vessels. Eventually, the P&I club would look at covering overseas transit as well. Overseas marine insurance covers amounts running into billions of dollars, which India’s entity would not be able to undertake initially. Meanwhile, a finance ministry panel has said that the Insurance Act — in its present form — does not allow the operation of mutual insurance associations in the sector.
Earlier this week, Business Standard had reported that the reform is likely to be undertaken only after the Lok Sabha elections. Industry veterans previously called for this entity to be formed jointly with the Inland Waterways Authority of India (IWAI). The Centre will later decide if it will also pool in its own funds for this entity, sources said. Shipowners buy P&I insurance to cover themselves from huge costs of any accident that could harm cargo, lives of people, and the environment. This cover is usually bought through not-for-profit clubs of like-minded ship owners. The International Group, or IG, comprises 13 P&I clubs. This group provides marine liability cover to 90-95 per cent of all global sea tonnage. In October 2023, Finance Minister Nirmala Sitharaman had said that India needs its own P&I entity to protect itself from international volatility. In the past, oil supply from Russia due to the Ukraine war was impacted as ships carrying the commodity struggled to get insurance. This was due to the sanctions imposed by the European Union (EU). EU insurers were prohibited from providing cover to tankers carrying Russian oil.
