Business Daily from THE HINDU group of publications
Friday, Sep 01, 2006
Logistics - Shipping
IFFCO Tokio to offer P&I cover for ships soon
P&I insurance is a cover against liabilities like loss of damage to third party, wreck removal and pollution risks.
Indian companies have refrained from offering this cover because it is considered high risk.
The hull insurance market is worth more than Rs 800 crore in terms of premium.
Mumbai , Aug. 31
IFFCO Tokio General Insurance Company will soon offer short-term Protection and Indemnity (P&I) covers for ships while they are berthed at Indian ports. With the proposed rule for ships to have compulsory P&I insurance while they are at an Indian port, there is an opportunity for IFFCO Tokio the only domestic company to offer such a cover.
P&I insurance is a cover against liabilities such as loss of damage to third party, wreck removal and pollution risks, and companies in India have refrained from offering this cover because it is considered high risk.
Mr Abhijit Chatterjee, Head of Marine department, IFFCO Tokio, said the company was exploring the possibility of providing P&I cover for vessels calling at Indian ports. "We will offer liability limits of Rs 10-20 crore for a short-term period of 10-15 days. The premium would depend on a host of rating factors like the size and condition of the vessel and the liability covers that are opted for," said Mr Chatterjee.
Sagar Bandhu policy
IFFCO Tokio had introduced the Sagar Bandhu policy in November 2005 to offer protection and indemnity insurance mainly for barges in India. The company has now covered more than 80 vessels under the policy, mainly from the Goa Port. The maximum liability offered under this policy is Rs 5 crore. IFFCO Tokio has so far collected around Rs 40 lakh in terms of premium.
"We entered the area of P&I insurance mainly to gain in experience despite the fact that it is high risk and specialised. The experience has so far been favourable since we began by offering smaller liabilities," he said.
With this new cover, the company hopes to target vessels that have not secured insurance from a reputed P&I club. As per the proposed Government notification, ships should have P&I insurance either from a Government-approved club or from an insurance company.
"The RBI regulation allows us to insure ships that are either owned or managed by an Indian. If the opportunity arises, we will seek permission from the RBI for insuring ships that have absolute foreign ownership as well," said Mr Chatterjee
But public sector general insurance companies still believe that P&I insurance is a risky proposition. "Ocean-going large vessels usually secure fixed premium insurance from international P&I clubs as the severity of losses could be high under such policies. The Indian market still does not have the expertise to design specialised covers," said a senior official at a public sector insurance company.
The hull insurance market is worth more than Rs 800 crore in terms of premium and premium rates have been on the decline since the segment was detarrifed last year.
In a highly competitive market, companies like IFFCO Tokio are looking at other avenues.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line