MC Explainer | Why India is eyeing its own Protection & Indemnity Club

Protection & Indemnity (P&I) clubs are mutual insurance associations that provide liability insurance to shipowners and operators for risks that standard marine insurance won’t cover.

• India considers setting up its own maritime P&I insurance club
• Move aims to reduce reliance on foreign marine liability insurers
• Domestic P&I club may boost India's shipping and logistics sector

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The proposed India-based maritime Protection & Indemnity (P&I) Club is currently under consideration by the department of financial services, according to K Rajaraman, chairperson of the International Financial Services Centres Authority (IFSCA).

“The implementation timeline is a subject matter of the Government of India,” Rajaraman said, adding that the regulator is awaiting further clarity. The proposal had earlier been flagged by Finance Minister Nirmala Sitharaman, who underscored the need for a domestic P&I mechanism to reduce India’s dependence on overseas marine liability insurers.

The move comes at a time when global shipping risks are rising and insurance access is increasingly shaped by geopolitics, sanctions regimes and environmental liabilities.

So, what are P&I clubs?

Protection & Indemnity (P&I) clubs are mutual insurance associations that provide liability insurance to shipowners and operators for risks that standard marine insurance won’t cover.

While traditional hull and cargo insurance protects the physical ship or cargo against damage, P&I insurance safeguards against third‑party liabilities, from crew injuries and passenger claims to environmental pollution, collision damage and wreck removal costs. These liabilities can run into billions of dollars, making P&I cover indispensable for global shipping operations.

Unlike commercial insurers who operate for profit, P&I clubs are non‑profit, member‑owned cooperatives. Shipowners and charterers pay annual contributions, known as calls, into a pooled risk fund. If claims are low, future calls may be reduced; if large losses occur, members are usually asked to pay additional calls to replenish the pool. This mutual model spreads risk across a collective and aligns incentives among members.

How P&I clubs fit into global shipping

P&I clubs play a systemic role in maritime trade because liability cover is a pre‑condition for vessels to operate internationally. Port authorities, financiers and charterers typically require proof of P&I coverage before a ship is allowed to dock or load cargo.

Around 90 percent of the world’s ocean‑going tonnage is insured through clubs that are members of the International Group of P&I Clubs, which jointly pools large losses and shares expertise across markets. This structure is especially critical for covering unpredictable, high‑severity events such as oil spills, environmental damage and large‑scale collision liabilities, exposures that commercial markets often avoid or price prohibitively.

Why P&I insurance is strategic and not just technical

P&I cover is deeply linked to trade flows, regulatory compliance and geopolitical risks. In recent years, sanctions regimes tied to Russia and other conflicts have complicated the ability of shipowners to secure internationally recognized P&I insurance. Vessels lacking cover from established International Group clubs can face port entry delays or refusals, as regulators tighten documentation checks and verification systems.

This matters for oil imports, container trade and critical supply chains. For example, delays in discharging Russian crude at Indian ports in late 2025 were partly attributed to the time taken to verify insurance from non‑International Group insurers, which is an issue that underscores how liability cover is now interwoven with sanctions compliance and maritime security.

Why India is talking about its own P&I club

India’s maritime policy community has increasingly argued that the country needs its own P&I club to support its shipowners, traders and energy importers. Domestic capacity could reduce reliance on foreign insurance markets, especially at times of geopolitical friction, and offer continuity of cover if Western sanctions or global market conditions limit access to international clubs.

Proponents also highlight that building a homegrown P&I ecosystem would foster local expertise in maritime law, claims management and risk assessment, helping India boost its broader shipping and logistics agenda. In the interim, Indian authorities recently granted interim extensions to four Russian insurers, including Soglasie Insurance, Sberbank Insurance, Ugoria Insurance Group and ASTK Insurance, allowing them to continue providing P&I coverage for vessels calling at Indian ports until March 20, 2026.

This step is meant to ensure uninterrupted marine insurance for high‑value cargo shipments like crude oil while regulatory and strategic frameworks evolve.

What specific liabilities does P&I insurance cover that others don’t?

P&I insurance covers broad third‑party exposures that traditional marine insurers typically avoid. These include liabilities for loss of life, injury or illness of crew and passengers, cargo loss or damage, collision liabilities, port and canal damage, wreck removal, environmental pollution cleanup costs, fines and penalties imposed by regulators, and expenses such as crew repatriation. These exposures can exceed a ship’s value and therefore require pooled, high‑limit coverage that P&I clubs are structured to provide.

How do P&I rates and underwriting work from an insurance perspective?

P&I clubs calculate contributions (calls) based on factors such as vessel type and age, trade routes (with higher risk in piracy or conflict zones), operator safety record, and claims history. Premium structures are broadly industry‑driven, and clubs maintain financial reserves to meet large or catastrophic losses. Clubs may also adjust calls year‑on‑year depending on overall claims experience.