Shippers to set up club to meet damages

India will soon set up a Protection & Indemnity Club (P&I Club), a fund that would be set up by ship owners and industry to pay for damages that are not covered under regular insurance schemes.

"There is a move to establish a P&I Club in the country. However, we cannot say when it would be set up," Shipping Corporation of India (SCI) Chairman and Managing Director S Hajara said.

According to SM Divekar, an industry expert, India has all the required maritime knowledge, and establishment of a P&I Club would immensely help the industry.

He said that at present the vessels were insured against marine and war risks by the hull underwriters.

However, in case of liabilities to others (third party), there is only provision to provide three-fourth of the damages, he added.

To meet the uninsured one-fourth, which became a heavy burden to the companies, the ship owners set up P&I Clubs.

The vessel owners pool in money "" on the basis of the tonnage they carry "" into the club, which is then used to meet these expenses. Divekar also said the Reserve Bank of India (RBI) had earlier given an ultimatum to the industry to set up the P&I Club in two years.

"At present Indian shipping companies go to the P&I Clubs in London to pay for third party damages. Conventionally, P&I Clubs were set up in London and even though other countries have also set up these clubs, India is yet to get one," he said.