What an ‘India Club’ means for the country’s shipping industry
Mint explains the significance: What is a P&I entity or club? A P&I entity or a P&I club is a mutual insurance association that provides risk-pooling information and representation for its members. Unlike a marine insurance company, which reports to its shareholders, a P&I club reports only to its members that include ship owners, operators, charterers, freight folders and warehouses. These act as both insurer providers and insurance receivers for its members and provide coverage for a carrier’s third-party open-ended risks such as damage to cargo, war, and environmental damage such as oil spills.
Traditional insurers are reluctant to provide such cover. The International Group of P&I Clubs, based in London, comprises 13 clubs, which provide cover for approximately 90% of the world’s ocean-going ships. These include clubs from the UK, US, Korea, Singapore, Japan, the Netherlands, China, Bermuda, Norway and Sweden.
These clubs cooperate to provide funds in the event of huge claims using a complex system to determine liability. Club members contribute to the club’s common risk-pool according to the pooling agreement rules. Several Indian shippers operating on global routes also take P&I cover from these clubs, which allows them to operate in global maritime zones.
Why is India looking to set up its own P&I entity? An India-focused local entity may reduce the country’s vulnerability to international sanctions and pressures, as coverage is denied to ships operating between countries facing sanctions. The Russia-Ukraine war, and its fallout, have reinforced the need for such a coverage. The coverage, initially, will mostly be for domestic movement of ships.
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