Protection and Indemnity (P&I) Entity – India club

Protection and Indemnity (P&I) Entity – India club

News: Recently, 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.

Background:
• Presently, the Indian shipping industry relies on global firms for insurance coverage.

What are P&I entities?
• 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.
• These clubs provide coverage for thirdparty risks like cargo damage, war, and environmental hazards, which traditional insurers often avoid.

Why do we need India club? How will it work?
• A local P&I entity can mitigate risks related to international sanctions and pressures, as seen in the Russia-Ukraine conflict.
• However, for the time being, the India Club will primarily insure ships involved in domestic movements.
• The Ministry of Ports, Shipping, and Waterways is spearheading the formation of this coalition of domestic fleet owners.

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

Way Forward
• Establishing the India Club is a strategic step towards enhancing India’s maritime insurance capabilities and reducing dependence on international entities.
• If successfully implemented, the India Club could significantly bolster India’s maritime sector, offering tailored insurance solutions for domestic shipping needs.