Mumbai: A move by the shipping ministry that makes it mandatory for ships calling at Indian ports to possess valid cover for wreck removal and oil pollution from a government-approved insurer has got entangled in procedures.
According to the Wreck Removal/Port Entry Rules drafted by the shipping ministry under Section 6 of the Indian Ports Act, 1908, global insurers who provide insurance to shipowners against third party liabilities relating to the use and operation of ships, must submit detailed documentation and information to the ministry about their policies to become empanelled as ‘designated insurers’ for the purpose of implementing the new Rules.
The new rules are being introduced to ensure that shipping companies pay for the damages caused by ships to ports and harbour. If ships have valid cover, ports can claim expenses for wreck removal and damages for oil spillage directly from the insurers in the event of a mishap.
However, the International Group of Protection and Indemnity (P&I) Clubs, have questioned the need for them to provide the documentation and information stipulated by the government. The group, comprising 13 mutual P&I Clubs which between them provide cover for oil pollution and wreck removal for over 90% of the world’s ocean-going ships by tonnage and 95% of the world’s tanker fleet, has sought an exemption from going through the process of approval for becoming ‘designated insurers’ and get their policy approved by the shipping ministry. A list of ‘designated insurers’ so prepared would remain valid for a two-year period. The International Group of P&I Clubs are mutual insurance entities owned and controlled by shipowners. All members pool their resources to meet the losses suffered by individual members.
India is trying to replicate the compulsory insurance system followed in Japan for ships calling at Japanese ports.
“However, the procedures envisaged in the Indian Wreck Removal/Port Entry Rules appear to be much more onerous than those contained in the Japanese regulations,” the International Group of P&I Clubs said in a presentation during a stake-holders meeting called by the shipping ministry in Delhi on 18 July to discuss the issue. Japan gives approvals without documentation to International Group of P&I Clubs and other reputed insurers.
“Neither Japan, nor any other country, requires...documentation along the lines envisaged in the draft rules,” the group said in its presentation.
The group also warned that “ the extra costs involved...would be passed on to the shipowner members of each P&I Club/Association.”
A person who attended the 18 July meeting said the discussions were “very helpful and fruitful”. “We are confident that a compromise solution can be found,” he said asking that he not be identified.