A government-commissioned feasibility study has concluded that an Indian Protection and Indemnity (P&I) club is technically and financially feasible, according to the Directorate General (DG) of Shipping. As reported by Business Standard, the study, commissioned last July to Ace Insurance Brokers, recommends starting with a fixed-premium model and scaling to a mutual model over time. The recommended approach involves anchoring the entity by General Insurance Corporation of India (GIC Re) and global reinsurers, with initial support from experienced international service providers for claims handling and security issuance.
According to government estimates reported by Business Standard, Indian operators send out an estimated $45-60 million in annual P&I premium to foreign clubs. P&I clubs currently cover nearly 90 per cent of all ocean trade and collect $3.8 billion in annual insurance premiums. The study notes that this is not the standard international P&I club model but could represent an important starting point for India's maritime insurance sector.
Under the fixed-premium model, insurers charge set premiums for the year, carry risks on their own capital, and make no further demands on members, providing predictable coverage and quick launch capabilities. However, capacity remains limited by capital and members share no upside. The mutual model requires members to be their own insurers through advance calls and supplementary calls when claims exceed expectations, delivering greater capacity and lower long-term costs but requiring scale, member solidarity, and trust for largest liabilities.
The need for an Indian P&I club was highlighted by finance minister Nirmala Sitharaman in 2023, who emphasized it was essential for India to protect its trade during global disruptions. According to Business Standard, the conversation gained momentum after the West Asia crisis began in February, spiking insurance premiums significantly and leaving Indian exporters facing massive cost increases. In March, former shipping ministry special secretary Rajesh Kumar Sinha confirmed that the finance ministry and shipping ministry were coordinating and awaiting the study findings to proceed with setup.
In March, India launched the Bharat Maritime Insurance Pool - a sovereign-backed fund managed by GIC Re that has reportedly issued over 80 policies within the first 30 days of operations. As reported by Business Standard, the pool carries $1.5 billion of total pool capacity with a sovereign guarantee of ₹12,980 crore and a $100 million claim threshold for the pool's own resources. Former financial services secretary M Nagaraju noted during the first policy awards that the pool paves the way for a P&I entity, while officials had previously flagged that a mutual P&I club would require changes to the Insurance Act.
