In the face of West Asia crisis, is India thinking of setting up a P&I club?

New Delhi: Is the West Asia crisis pushing India to think of setting up a domestic protection & indemnity (P&I) club? Rajesh Kumar Sinha, Special Secretary, Ministry of Ports, Shipping and Waterways, indicated that discussions on setting up such a mechanism have seen fresh movement as shipping lines raise concerns over war-risk premiums.

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Sinha told reporters on Tuesday during an inter-ministerial briefing that some shipping lines had raised concerns about additional war-risk premiums and freight insurance, and the ministry has asked them to spell out the problem in detail. “About freight insurance — whether there is another scheme or a Commerce Ministry scheme — I can’t say right now. We’ve engaged on our end on insurance, basically about the additional war-risk premium. Some shipping lines have raised this issue, so I have asked them to give us something specific, because this problem was not raised earlier,” he said.

Sinha said the issue did not affect the two VLGC transits handled with the Shipping Corporation, but emerged with other lines later. “As soon as they inform us, we will take this up,” he said, and noted that the Directorate General of Shipping has issued an advisory urging transparency on any extra shipping charges or levies.

Study on P&I club partly complete: Sinha

On the prospect of a national P&I club, Sinha said, “It is a very important point. We’ve made considerable progress on discussions about a P&I club. A few days ago we raised it again with the Department of Social Services. A study on this is partly complete and we should have the report very soon. Based on that, we’ll move forward — this will be an important step for us in the near future,” he said.

What a P&I club is & why countries set them up

A protection and indemnity club is a mutual insurer owned by its shipowner members that covers third-party liabilities traditional insurers do not, such as crew claims, pollution, wreck removal and many open-ended liabilities. It can include war-risk or P&I war cover in stressed times. P&I clubs operate as co-operatives — members share risk and contribute to a common pool, large losses can be shared among member clubs and reinsured collectively through the International Group.

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Which nations have P&I clubs?

Major P&I Clubs are primarily based in leading maritime nations, with the 12 International Group (IG) members concentrated in the UK, Japan, Norway, Sweden, USA, and Bermuda. National and regional P&I clubs exist across Asia and beyond. Examples include the Japan P&I Club, China P&I Club and Korea P&I Club — each a full-service mutual P&I insurer that provides members with P&I cover and related services. These clubs are members or partners of the broader international P&I framework that handles large losses and provides global credentials accepted at ports.

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