India’s Maritime Insurance Initiative

• India plans its own maritime insurance entity, India Club, initially focusing on domestic routes for third-party coverage.
• The cooperative model, supported by the Ministry of Ports, aims to reduce costs for shipping lines.
• The initiative may later expand to cover international routes, minimizing vulnerability to coverage denial.

India is planning to establish its own Protection and Indemnity (P&I) entity called India Club to offer third-party maritime insurance to Indian ships operating in coastal regions and inland waterways. The initiative aims to provide coverage for unforeseen situations such as cargo damage, war-related damages, and environmental risks.

Initial Focus on Coastal and Inland Shipping

Initially, the India Club will focus on catering to coastal shipping and inland waterways, addressing the significant coverage required for ships moving on international routes at a later stage. The details and modalities of the entity are still under development, with the Ministry of Ports, Shipping, and Waterways expressing readiness to provide seed money for the initiative.

Coalition Formation and Government Support

The Ports Ministry is working to form a coalition of domestic fleet owners operating on coastal and inland waterways routes to support the India Club. Public sector insurance companies like New India Assurance and GIC Re are being approached as potential partners, aiming to make the local P&I entity more cost-effective for shipping lines compared to foreign alternatives.

Cooperative Model and Potential Cost Benefits

Operating as a cooperative, a P&I club involves members, including ship owners, cargo operators, charterers, freight forwarders, and warehouse owners, who contribute to an annual fee pooled for third-party insurance. The not-for-profit organization, reporting to its members, may offer cost benefits for shipping lines compared to foreign entities.

Strategic Approach: Inland Waterways Focus

Anil Devli, CEO of the Indian National Shipowners’ Association (INSA), suggests starting the P&I entity with a focus on fleets operating on inland waterways. A joint collaboration with the Inland Waterways Authority of India (IWAI) and New India Assurance could establish expertise before expanding coverage to global shipping lines.

Future Expansion to International Routes

The India Club might consider providing indemnity insurance cover to ships on international routes in the future, enabling India to join the global P&I entities’ exclusive club. This move could reduce vulnerability to situations where insurance coverage is denied due to sanctions between countries.

Current International Insurance Landscape

Presently, third-party risks are insured with the International Group of P&I Clubs, a London-based 13-member group providing liability cover to over 90% of global shipping lines. The eventual international expansion aligns with the recognition of potentially high insurance costs, especially for significant risks like crude tanker operations.

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Source: Mint

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