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HomeMaritimeIndia Club – navigating new waters in Protection and Indemnity insurance

India Club – navigating new waters in Protection and Indemnity insurance

On the back of rapid economic growth driven by several growth initiatives of the Government, India seems to be charting a course towards self-reliance in maritime insurance with the proposed creation of “India Club” a homegrown Protection and Indemnity (P&I) club.

If you don’t know what a P&I Club is, read our previous article about What is a P&I Club, what they do, and why we need them in our lives, but below is a summary of what they do.

P&I Clubs provide protection and indemnity insurance to shipowners against third-party liabilities and expenses including

  1. Cargo loss or shortage ;
  2. Pollution from the ship and/or its cargo ;
  3. Cargo damage, delay or other responsibility occurring in relation to the carriage of cargo on the entered vessel ;
  4. Loss of life and injury to crew members and/or passengers ;
  5. Wreck removal ;
  6. Collisions with other ships ;

India Club initiative

This initiative, aimed at providing third-party maritime insurance initially for Indian ships operating along the country’s coastal regions and inland waterways, reflects a strategic shift in India’s approach to maritime risk management.

As per T.K. Ramachandran, secretary in the Union Ministry of Ports, Shipping, and Waterways, considering the large coverage required for ships traversing international routes, the India Club intends to initially focus on domestic routes with aspirations to eventually extend coverage to international waters.

The details and modalities of this entity are still being worked out, but the ministry is ready to provide any seed money required for the initiative,”  said Ramachandran.

The India Club’s concept represents a significant departure from traditional marine insurance, offering coverage for a broader spectrum of risks including cargo damage, war, and environmental hazards.

This contrasts with standard marine insurance, which typically covers only a ship’s hull and machinery. By pooling resources from domestic fleet owners and partnering with public sector insurance companies, the India Club aims to create a cooperative, not-for-profit model that prioritizes the interests of its members over shareholders.

However, the proposal raises critical questions about the viability and utility of such an initiative. Industry experts are suggesting a phased approach, beginning with coverage for smaller vessels on inland waterways.

This cautious start acknowledges the vast financial requirements for covering larger, international shipping operations, where liabilities can reach astronomical sums.

This initiative to launch a homegrown P&I club has also been supported by the Finance Minister of India, Nirmala Sitharaman who has reportedly emphasized the need for India to establish a comprehensive protection and indemnity (P&I) entity while speaking at the Global Maritime India Summit 2023.

This move, she stated, is crucial for reducing India’s susceptibility to international sanctions and pressures. Sitharaman highlighted that such an entity would not only enhance the strategic flexibility of India’s shipping operations but also provide India with a significant presence in the specialized segments of the P&I business. This sector is currently under the control of a handful of global players.

As per UNCTAD, as of 2022, Indian ships accounted for 1.19% of global deadweight tonnage with a good 63% being Indian-flagged ships which is way above the total global percentage of 29% own-flagged ships.

The initiative embodies India’s ambition to enhance its strategic maritime autonomy as the club could potentially shield Indian shipping operations from the impact of international sanctions, thereby bolstering national resilience.

The journey towards establishing the India Club is however laden with challenges and uncertainties.

Will this initiative truly transform India’s maritime industry, or will it sail into uncharted waters only to find itself adrift, these are some of the questions swirling in the minds of maritime experts.

As India navigates these complexities, the viability and utility of the India Club remain open questions, awaiting answers in the tides of time and policy.


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3 COMMENTS

  1. My english is poor but this is a translation of my comment by Google tranlator:
    “The creation of a P&I protection club and its sustainability are based on the number of member shipowners.
    Creating a P&I Club for the needs of a fleet of a single country, even that it is India, will be doomed to failure because all insurance is based on the principle of pooling risks, which are very important for this type of cover.”

  2. la création d’un club de protection P&I et sa pérennité reposent sur le nombre d’armateurs adhérents.
    Créer un Club P&I pour les besoins d’une flotte d’un seul pays, fût-elle celle de l’Inde, sera voué à l’échec car toute assurance repose sur le principe de la mutualisation des risques lesquels sont très importants pour ce genre de couvertures.

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