Business Daily from THE HINDU group of publications
Friday, Aug 18, 2006
Business Daily from THE HINDU group of publications Friday, Aug 18, 2006 |
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Logistics
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Shipping Money & Banking - General Insurance Insurance cos ready to offer special cover for ports Amit Mitra
The proposed alternative envisages shifting the responsibility for meeting such expenses from the shipping lines to the ports.
Mumbai , Aug 17 Insurance companies, including GIC, have indicated their willingness to design insurance products exclusively for Indian ports to cover costs of shipwreck disposal and oil spill clearance in the aftermath of an accident. The insurance companies expressed this willingness at a meeting held by the Nautical Advisor to the Government of India with port officials, port users and shipping companies to discuss alternatives to the P&I insurance scheme for shipwreck disposal. The proposed alternative envisages shifting the responsibility for meeting such expenses from the shipping lines to the ports. As ports are the worst affected by shipwrecks and oil spills, the meeting suggested that ports could take insurance covers and pass on the burden to port users, such as shipping companies.
No consensus
Although the insurance companies were willing to come out with special products to meet this requirement, the meeting could not arrive at a consensus from all the parties present. "As the proposal involves a wide gamut of issues, it certainly cannot be decided in one meeting. We will be meeting again on this soon," Capt M.M. Sagi, Nautical Advisor to the Government of India, told Business Line. The need for a foolproof insurance scheme to cover wreck removal and oil spill clearance is, indeed, an intrinsic one. In the recent past there have been five to six shipwrecks, which continue to pose problems to the ports as none of the insurance companies or ship-owners have come forward to clear them. Under the Entry Rules, which was introduced from September 2005, no ship can call at an Indian port without an insurance cover from a Government-approved P&I club or an insurance company to meet the cost of shipwreck disposal. But, following protests from shipping lines, the Government decided to keep the new rules in abeyance. The rules were primarily meant to ensure that shipping companies pay for the damages caused by their ships to port installations, covering shipwrecks and oil spills also. Against this background, the alternative to the P&I cover was discussed.
Sharing the burden
Sources said both ports and shipping companies were not enthusiastic about the proposed alternative. Port representatives made it clear that the ports cannot bear the financial burden of taking insurance cover and that part of the burden would be passed on to the users. Taking the cue from this, shipping companies claim that some of their ships are already insured with international insurance companies and not with those included in the Government-approved list. "If the port passes on the (financial) burden to us, this means that we are doubly charged on the insurance front," a shipping industry representative said. Sources said that another view held was that if the proposal covered only the ports for shipwrecks and oil spills, the rest of the coastline remained uncovered. On this, Capt Sagi said: "But we have to make a beginning. The idea is to first cover the ports and then discuss options to cover the coastline and, later on, the country's entire EEZ."
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