The Department of Financial Services(DFS) last week has written to the IFSCA to go ahead with earlier plans to develop P&I Club and Captives in its jurisdiction after eruption the West Asian crisis completely disrupting shipping and supply of oil and liquefied petroleum gas (LPG) to India.
New Delhi:After saying no to such proposals earlier, in view of the West Asia crisis triggered by US-Israel war with Iran, the government has hurriedly asked the International Financial Services Authority (IFSCA)to revive its old plans to facilitate a Protection and Indemnity Club( P&I Club) for as well as Captives in the GIFT IFSC, India’s sole international financial services centre.
Both P&I Club and Captives are currently not allowed in the country.
P&I club is a mutual insurance association covering third-party liabilities like oil spills, cargo damage, and crew injuries. Currently, all third-party risks in shipping are re/insured with the London based International Group of P&I Clubs, a not-for-profit association of 12 P&I Clubs providing marine liability cover for 90 per cent of the world’s ocean-going tonnage.
Captive insurance is a form of self-insurance where a large company creates its own licensed insurance subsidiary to cover its own risks, rather than paying premiums to third-party insurers. It acts as an in-house risk management tool, offering tailored coverage, potential tax benefits, reduced premiums, and greater control over claims and risk financing.
The proposed Captives in the GIFT –IFSC will come handy for all the PSU Oil and Gas majors to insurer their assets at a much cheaper costs.
For the first time, Mumbai based Hindustan Petroleum during last year had floated a proposal to select a consultant for setting up of a Captive in the country.
The IFSCA is a unified regulator for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India and currently acts as a regulator of Gujarat based GIFT IFSC, which has global players across the financial sector services including banking, capital markets and re/insurance having their operations in the centre.
The Department of Financial Services(DFS) last week has written to the IFSCA to go ahead with its earlier plans to develop P&I Club and Captives in its jurisdiction after eruption the West Asian crisis completely disrupting shipping and supply of oil and liquefied petroleum gas (LPG) to India.
In fact,the IFSCA, way back in Dec, 2022, had asked government’s nod for setting of both P& I and Captives but was declined approvals without giving any reasons and was intimated about the decision as recently as Feb, 2026.
Shipping insurance premiums, specifically war-risk coverage for vessels in the Red Sea and Persian Gulf, have surged significantly due to the West Asian crisis, with rates rising from around 0.25 per cent of a ship’s value to over 1 per cent —and sometimes as high as 3 per cent —a 50 or more increase in costs.
Special Secretary in the Shipping Ministry Rajesh Kumar Sinha, last week had said that war risk insurance premiums for ships have increased amid evolving security concerns in sensitive maritime regions.
Sinha had said discussions on setting up a domestic P&I club have been revived as shipping lines raise concerns over war-risk premiums because of the West Asia crisis.
“ We’ve made considerable progress on discussions about a P&I club. A few days ago we raised it again with the Department of Financial Services. A study on this is partly complete and we should have the report very soon. Based on that, we’ll move forward — this will be an important step for us in the near future, Setting P&I Club will be gradual and time taking affair and ” he said.
The centre last week had also announced the Resilience & Logistic Intervention for Export promotion (RELIEF) scheme, with a funding of Rs 497 crore, to support Indian exporters impacted by the ongoing conflict in West Asia.
The scheme focuses on mitigating the sharp rise in logistics costs and insurance premiums for shipments heading to the Gulf and West Asia.