Plans to set up Indian P&I Club are in pipeline
Marine premium formed about 2 per cent of the
gross domestic premium in FY20. India has been looking to put in place a
P&I club for a few years now.
This wait may seem to come to an end, as the
Insurance Regulatory and Development Authority of India (IRDAI) is in talks
with Indian National Shipowners Association (INSA) to develop a protection and
indemnity insurance club (P&I club) in India, a move that will support the
development of a marine insurance market in India, said insurance sector
players at a Maritime India Summit.
A P&I club is a mutual insurance
association that enables risk pooling among members and provides information
and representation for its members. A P& I club provides cover for
open-ended risks (such as war risk, environmental damage such as oil spills and
pollution) that traditional insurers are reluctant to insure. P&I clubs are
structures where shipowners, operators and seafarers pool in money that can be
used to help shipowners or seafarers in challenging times. These days even
freight forwarders and warehouse operators are able to join P&I clubs in
Meanwhile, the General Insurance Council is
set to automate the re-insurance payment system, a first such initiative
globally, making India the first country to digitise reinsurance, said Kuhu
Mohapatra, DGM-Marine Underwriter, New India Assurance Company. Most of the
re-insurance work and processes are paper-based globally she pointed out,
adding that Singapore is making an effort in the same direction.
While India accounts for a low share of
marine insurance globally, its software prowess could be used to give India the
necessary leg-up in the area, pointed out IRDAI.
Subhash Chandra Khuntia, Chairman, IRDAI,
said that primary insurance (for marine sector) can grow if there is presence
of reinsurance and called for starting a protection and indemnity club in
India. He also sought support from shipowners for information sharing regarding
Indian and foreign vessels and insurance pooling initiatives such as salvage
association and P&I clubs. Salvage is the process of recovering cargo after
a ship wreck.
Growth of this area depends on the
availability of ecosystem, pointed out Arti Mathur, GM, Oriental Insurance
Company. Marine insurance business in India is in the range of 1.5-2 per cent,
which further shrunk during the pandemic, Mathur added.
Gujarat International Finance Tec-City IFSC
(International Financial Services Centre) can be a platform for such
activities, pointed out experts.
As India looks to develop a robust marine
insurance sector, challenges that need to be addressed include lack of P&I
clubs (for covering risks like loss of lives) and lack of claims assessment
expertise, said Mohapatra.