India, a vital buyer of Russia’s oil exports, is evaluating the idea of creating its own marine insurer to protect commercial ships against risks including collisions and spills, a senior government official said.
While the idea is at its very early stages, if successful it could ultimately ease the Asian country’s dependence on western service providers, who — because of US-led sanctions — are supposed to only insure Russian crude oil shipments if they have documentation showing it cost $60 a barrel or less.
The initial evaluation, whether to create a so-called Protection and Indemnity club, is expected to be completed within two to three months, after which an outline plan should be ready, the official said, asking not to be identified discussing a sensitive government matter. New Delhi is working with banks, financial service providers and the wider insurance industry on the project, he said.
It isn’t clear how will the so-called India Club will arrange the funding or reinsurance required for providing third-party cover, or whether the South Asian nation has a shipping market size to warrant such a program.
India has been stuck between trying to secure western insurance for its imported Russian oil cargoes purchased under the price cap, or having to rely cover that isn’t from industry-standard providers. That means if something goes wrong, it’s not always clear who would pay out.
Since the war in Ukraine, the country has become a vital petroleum buyer from Moscow, alongside China, because Europe all but stopped importing from its one-time trade partner.
The initial idea would be to cover ships operating in inland waterways before extending the program to international sea going vessels, the official said.
Federal Finance Minister Nirmala Sitharaman in October said that India-based P&I unit was needed to reduce the South Asian nation’s vulnerability to international sanctions and to extend greater strategic flexibility in shipping operations.
Indian shippers presently rely on the international market, in particular the London-based The International Group of P&I Clubs, a group of 12 clubs that between themselves provide marine liability cover for about 90% of the world’s ocean-going tonnage.
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