Indian Government Plans Marine Insurance Initiative for Cargo Vessels

The Indian government is considering using its own funds as an initial investment to establish a protection and indemnity (P&I) entity for insuring cargo vessels. This move comes after a year of little progress due to regulatory uncertainties and the early stages of the Indian shipping sector. Private insurers and shippers are expected to contribute at a later stage in this initiative, according to officials familiar with the situation.

Discussions have been ongoing with industry stakeholders, with a proposal to cover coastal and riverine vessels initially. The government is exploring options for international partnerships to pool funds for the insurance entity, potentially involving government-backed funds or other P&I clubs. The finance ministry is considering amending the Insurance Act to allow mutual insurance associations, a crucial step for the formation of a P&I club.

The plan is to start with a fixed premium framework and involve larger global players in managing reinsurance in a second layer. Indian-owned ships are currently insured in other countries, with premiums being higher for vessels navigating risky regions like West Asia and Russia. The goal is to create a mechanism to address the lack of mature coverage in India’s marine insurance sector, with talks ongoing among stakeholders.

In conclusion, the government is working towards establishing a marine insurance entity to provide coverage for accidents affecting cargo, human lives, and the environment. This coverage is typically offered through not-for-profit clubs of shipowners, with the International Group representing 12 P&I clubs. Efforts are underway to coordinate various stakeholders and make this initiative successful, although no specific timeline has been set yet.

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