Introduction

India is planning to establish its own Protection and Indemnity (P&I) entity, named the India Club, to insure ships operating along Indian coasts and waterways.
Presently, the Indian shipping industry relies on global firms for insurance coverage.

Understanding P&I Entities

Function and Structure: A P&I club is a mutual insurance association offering risk pooling, information, and representation for its members, including ship owners, operators, and other maritime stakeholders.
Coverage Scope: These clubs provide coverage for third-party risks like cargo damage, war, and environmental hazards, which traditional insurers often avoid.

International Group of P&I Clubs: Headquartered in London, this group comprises 13 clubs covering about 90% of the world’s ocean-going vessels.
Global Cooperation: These clubs operate on a cooperative model, pooling funds for large claims and determining liability through complex agreements.

Reducing Vulnerability: A local P&I entity can mitigate risks related to international sanctions and pressures, as seen in the Russia-Ukraine conflict.
Focus on Domestic Shipping: Initially, the India Club will primarily insure ships involved in domestic movements.

Government-Led Initiative: The Ministry of Ports, Shipping, and Waterways is spearheading the formation of this coalition of domestic fleet owners.
Scope of Coverage: The India Club will cater to vessels on coastal routes and inland waterways within India.
Involvement of Traditional Insurers: Traditional insurance and reinsurance companies may participate in underwriting claims and offering services.

Limited Beneficiaries: The initiative might primarily benefit state-owned and smaller shipping lines, as many Indian-owned ships operate under foreign flags to evade stringent regulations.
Acceptance Issues: The India Club’s coverage might not be recognized by global traders.
High Coverage Requirements: Offering extensive coverage, especially for large crude carriers, could pose financial challenges.

Strategic Move: Establishing the India Club is a strategic step towards enhancing India’s maritime insurance capabilities and reducing dependence on international entities.
Balancing Challenges and Opportunities: While the initiative presents opportunities for greater autonomy in maritime insurance, it also faces challenges in global acceptance and financial viability.
Potential for Growth: If successfully implemented, the India Club could significantly bolster India’s maritime sector, offering tailored insurance solutions for domestic shipping needs.