The Indian government is exploring the option of providing initial funding to establish a protection and indemnity (P&I) insurance entity for the country’s shipping industry.
This move comes after more than a year of limited progress on the initiative, announced by Union Finance Minister Nirmala Sitharaman, to create a P&I entity to insure vessels.
According to India Shipping News, a senior official from the Ministry of Ports, Shipping, and Waterways stated, “We’ve held several rounds of discussions, but the quantum of funds the industry is willing to commit won’t be much. We’re exploring options, including the possibility of an initial ‘seed’ fund once legislative provisions are in place.”
The Ministry has been working on this initiative alongside private insurers and shipping companies, with an inter-ministerial consultation process underway. However, the official highlighted the need for further clarity from the Department of Financial Services (DFS) before finalising the structure.
The proposed entity would initially provide insurance for coastal and riverine vessels, which fall outside the international P&I framework. These vessels present a lower risk profile, and the government is considering a fixed premium model in the early stages. The initiative also aims to eventually extend coverage to international export-import cargo, with potential support from international partnerships and government-backed funds.
Indian-owned ships are currently insured in various countries, and premiums for vessels operating in volatile regions such as West Asia and Russia are notably higher. “India’s marine insurance sector is not very mature in providing coverage for shipping. We are trying to establish a mechanism to address this,” a senior finance ministry official explained, adding that discussions around a mutual insurance model are ongoing.
The initiative, which remains in the consultation phase, faces several regulatory hurdles, including a potential amendment to the Insurance Act. This would enable the formation of mutual insurance associations, a key element for the proposed P&I entity. While no timeline has been set, industry insiders emphasise that significant coordination is required to ensure the project’s success.
India’s efforts to establish a P&I Club is part of its plan to develop domestic marine insurance markets that keep up with booming shipping industries. The idea of establishing such an entity was first brought up in 2021. More recent discussions between India’s Ministry of Ports, Shipping and Waterways and stakeholders took place in February this year.
