IFSCA’s proposed regulations could create an Indian base for member-owned insurers and marine liability clubs. However, the framework needs clearer legal forms, risk-based capital, stronger claimant safeguards and a credible route to international maritime recognition.

New Delhi (ABC Live–DSLA): The International Financial Services Centres Authority has proposed a dedicated framework for mutual insurers and Protection and Indemnity Clubs operating from the International Financial Services Centre.

Although the proposal opens an important regulatory opportunity, it also raises several legal, financial and operational questions. Therefore, ABC Live, in association with Dinesh Singh Law Associates, has examined the complete draft to identify issues that may require consideration before the regulations are finalised.

Public Interest Note

ABC Live, in association with Dinesh Singh Law Associates, is publishing this analysis as part of its public duty to place constructive suggestions in the public domain.

Accordingly, this report does not seek to oppose the proposed framework. Instead, it examines its strengths, drafting gaps and possible implementation risks so that IFSCA may consider the suggestions fairly before finalising the regulations.

Moreover, public consultation becomes meaningful only when stakeholders examine both the benefits and weaknesses of a regulatory proposal. Therefore, ABC Live and DSLA are placing these observations before IFSCA, insurers, shipping companies, legal professionals, maritime experts and the wider public.

DSLA has provided legal research, statutory analysis and regulatory observations. However, ABC Live retains full editorial responsibility for this report.

Summary

IFSCA’s draft regulations seek to create a separate regulatory framework for Mutual IFSC Insurance Offices, Mutual Protection and Indemnity Clubs and Non-Mutual P&I insurers.

The proposal is timely because India has expanded its ports, shipping corridors, ship-leasing activity and international financial services. Nevertheless, established foreign centres continue to handle much of the high-value insurance, reinsurance, claims and risk-management work linked with global shipping.

Therefore, the proposed framework could help GIFT IFSC enter a specialised part of the international insurance market. In addition, it could connect India’s ship-leasing, maritime-finance and insurance initiatives within one wider ecosystem.

However, the draft remains incomplete in several important areas.

First, it does not clearly connect each regulatory category with a recognised legal form. Second, its capital provisions do not fully reflect the structure of a member-owned mutual insurer. Third, the USD 1.5 million assigned-capital requirement for a foreign branch works mainly as an entry floor rather than a complete test of maritime risk.

Moreover, the draft contains internal inconsistencies. For example, one provision gives a registered entity 12 months to begin business, whereas another refers to regulatory action after 180 days. Similarly, one provision appears to require international pool participation, while another makes such participation optional.

Most importantly, IFSCA registration alone will not automatically make a new P&I Club acceptable to foreign ports, flag States, banks, reinsurers or treaty-based compensation systems. Consequently, international recognition will determine whether the proposed framework becomes commercially useful.

Therefore, the policy direction is positive. Nevertheless, IFSCA should correct the legal, prudential and operational gaps before notifying the final regulations.

Key Findings

  • First, the draft creates separate routes for Mutual IFSC Insurance Offices, Mutual P&I Clubs and Non-Mutual P&I insurers.
  • Moreover, members of a mutual insurer may vote, share surplus and face supplementary contribution calls.
  • In addition, a foreign branch must maintain assigned capital equal to at least USD 1.5 million.
  • However, one fixed entry amount cannot measure every category of maritime risk.
  • Furthermore, P&I entities may cover collision, pollution, cargo, crew, wreck-removal and other maritime liabilities.
  • Similarly, the draft requires governance committees, reinsurance, claims systems and sanctions screening.
  • Nevertheless, the permitted legal forms do not align clearly with the capital provisions.
  • Moreover, member exposure to supplementary calls needs stronger limits and clearer disclosure.
  • At the same time, third-party victims require separate service and legal safeguards.
  • Furthermore, IFSCA registration will not automatically secure global acceptance of Blue Cards or other financial-security documents.
  • Finally, conflicting time limits, faulty cross-references and missing numbering require correction.

ABC Live Regulatory Dashboard

Regulatory area Assessment Main concern
Policy objective Strong Implementation remains uncertain
Market opportunity High Global entry barriers remain substantial
Legal structure Weak Mutual legal form lacks clarity
Capital framework Mixed Entry capital is not fully risk-based
Member governance Positive Voting and call rules need detail
Claimant protection Weak Focus remains mainly on members
Reinsurance Positive intent Pooling provisions conflict
International recognition Incomplete No clear Blue Card pathway
Claims readiness Developing Global response network is undefined
Enforcement Strong Broad discretion needs safeguards
Drafting quality Needs revision Conflicts and cross-reference errors
Overall assessment 6.5/10 Important proposal, incomplete operating code

What IFSCA Is Proposing

The IFSCA public consultation framework seeks comments on proposed rules for registering, regulating and supervising mutual insurers and P&I entities in the IFSC.

Broadly, the draft creates three regulatory categories. Although these categories fall within one framework, their ownership structures, business models and financial obligations differ considerably.

Mutual IFSC Insurance Office

A Mutual IFSC Insurance Office, or MIIO, would operate as a member-owned insurance body. Subject to IFSCA approval, it may undertake life, general, health or reinsurance business.

Unlike customers of an ordinary insurer, its policyholders would also become members. Therefore, they could participate in management and may benefit from any surplus remaining after claims, expenses and reserves.

However, mutual ownership also creates financial responsibility. When claims exceed the amount initially collected, the insurer may ask members to make an additional payment known as a supplementary call.

Consequently, members would not merely buy an insurance product. Instead, they would join a shared-risk arrangement that may produce either surplus benefits or additional liabilities.

Mutual Protection and Indemnity Club

A Mutual P&I Club would insure the maritime liabilities of its members. These members may include shipowners, vessel operators, charterers and certain oil and gas companies acting in those capacities.

Generally, the club would operate on a non-profit basis. Members would contribute through premiums or calls and may share in the underwriting result.

At the same time, members may have to bear part of an unexpected loss through supplementary contributions. Therefore, membership would create both governance rights and continuing financial duties.

Moreover, the club would not function only as an insurer. It would also need to arrange reinsurance, manage maritime claims, monitor vessel risk and provide urgent support after serious casualties.

Non-Mutual P&I Insurer

A Non-Mutual P&I insurer would provide maritime liability cover for a fixed premium.

By contrast, a fixed-premium customer would not normally take part in management, share the insurer’s surplus or face supplementary calls. Consequently, this structure resembles conventional commercial insurance more closely.

Nevertheless, a fixed-premium P&I insurer would still need adequate capital, reliable reinsurance, strong claims systems and international recognition. Therefore, the non-mutual model does not reduce the need for strict prudential supervision.

Why the Proposal Matters for India

India relies heavily on shipping for energy, food, raw materials, containers, defence supplies and international trade. Nevertheless, foreign financial centres continue to handle a large share of the finance, leasing, insurance and dispute-resolution work linked with those ships.

IFSCA has already introduced a regulatory route for ship leasing. ABC Live’s earlier critical analysis of IFSCA’s ship-leasing framework found that India needs insurance, capital, claims expertise and dispute-resolution services alongside leasing.

Therefore, the proposed P&I framework could help build a broader maritime-finance system in GIFT IFSC. Moreover, it could connect ship leasing with insurance, reinsurance, claims management and professional maritime services.

In addition, the framework could attract:

  • marine underwriters;
  • reinsurers;
  • shipowners and charterers;
  • maritime lawyers;
  • surveyors and loss adjusters;
  • actuaries;
  • sanctions specialists;
  • emergency-response firms; and
  • claims-management professionals.

However, regulation alone cannot create a functioning global insurance centre. GIFT IFSC must also develop market trust, claims capacity, reinsurance access and international acceptance.

Therefore, the real test will not be the number of licences issued. Instead, success will depend on whether shipowners, ports, flag States, banks and reinsurers accept the new entities as reliable claims-paying institutions.

What Risks Can P&I Insurance Cover?

Protection and Indemnity insurance covers liabilities arising from the ownership, management, operation or chartering of ships.

Under the draft, cover may include:

  • third-party liabilities;
  • collision claims;
  • cargo loss or damage;
  • pollution and environmental harm;
  • crew injury and death;
  • passenger claims;
  • wreck-removal expenses;
  • salvage liabilities;
  • certain legally insurable fines; and
  • other approved maritime liabilities.

These risks can become extremely large. For example, one maritime casualty may involve deaths, pollution, cargo loss, port damage, wreck removal and litigation in several countries.

Moreover, some claims may remain unresolved for many years. Consequently, the insurer must maintain immediate liquidity as well as long-term reserves for delayed and uncertain liabilities.

Therefore, P&I regulation must examine much more than licence fees or minimum entry capital. Instead, it must assess claims capacity, reinsurance quality, reserve adequacy, emergency-response networks and long-term financial strength.

Global Comparison of Mutual and P&I Regulation

Established insurance centres generally connect licensing with risk-based capital, clear legal forms, strong governance, claims capability and international recognition.

Market Main approach Main strength Lesson for IFSCA
GIFT IFSC draft MIIO, Mutual P&I and fixed-premium P&I categories Separate regulatory route Clarify legal form and risk capital
United Kingdom Solvency UK and PRA supervision Risk-linked capital and governance Assess actual maritime exposure
European Union Solvency II framework Own funds, reporting and disclosure Define eligible mutual capital
Bermuda Different insurer classes and risk-based supervision Proportionate regulation Separate smaller mutuals from major P&I risks
Singapore Licensed marine mutual and P&I entities Strong maritime-services ecosystem Link regulation with ports and claims networks
International Group Independent clubs with shared large-loss arrangements Pooling, reinsurance and global recognition Build scale, trust and international acceptance

The comparison shows that IFSCA has correctly recognised the need for a separate regulatory route. However, global practice does not treat a P&I Club as an ordinary insurer with a different name.

Instead, a mature P&I system combines legal identity, member governance, risk-based capital, pooling, reinsurance and international claims services. Moreover, it requires acceptance by maritime authorities across several jurisdictions.

Therefore, IFSCA should treat the present draft as the beginning of an institutional framework rather than a complete operating code.

United Kingdom: Capital Must Reflect Actual Risk

The United Kingdom regulates insurers through the Prudential Regulation Authority and the Solvency UK framework.

Under this model, capital, governance and risk-management requirements reflect the insurer’s actual business. Therefore, the regulator does not rely only on a fixed amount paid at the time of registration.

This approach offers an important lesson for IFSCA. For example, a club covering smaller coastal vessels does not face the same exposure as a club covering tankers, offshore units or ships operating near conflict zones.

Consequently, IFSCA should assess:

  • vessel type;
  • fleet tonnage;
  • vessel age;
  • trading geography;
  • pollution exposure;
  • cargo type;
  • claim retention;
  • reinsurance quality; and
  • sanctions risk.

Moreover, IFSCA should examine concentration risk. For instance, a club may appear diversified by vessel count but may remain highly exposed when most members operate in the same region or carry similar cargo.

Thus, the proposed USD 1.5 million assigned-capital requirement may work as an entry floor. However, it cannot serve as a complete P&I solvency test.

European Union: Mutual Capital Needs a Clear Definition

The European Insurance and Occupational Pensions Authority describes Solvency II as a risk-based framework covering capital, governance, risk management, reporting and public disclosure.

Importantly, the framework also accommodates mutual insurance structures. Therefore, it does not assume that every insurer depends only on ordinary shareholder capital.

This distinction matters because a mutual insurer may draw financial strength from:

  • member contributions;
  • retained surplus;
  • contingency reserves;
  • guarantee funds;
  • subordinated instruments;
  • enforceable supplementary calls; and
  • reinsurance recoveries.

Accordingly, IFSCA should define which of these resources may qualify as regulatory capital. In addition, it should explain when unpaid member calls can support solvency and when they remain too uncertain to count.

For example, a legally enforceable call against financially strong members may provide meaningful support. By contrast, a call against members already affected by the same catastrophe may offer little real protection.

Therefore, the final rules should examine both the legal enforceability and financial reliability of supplementary calls. Otherwise, a member-owned insurer may struggle to comply with provisions designed mainly for a company limited by shares.

Bermuda: Different Risks Need Different Regulatory Classes

The Bermuda Monetary Authority supervises different insurers through a class-based and risk-based system.

Consequently, a captive insurer, commercial reinsurer and special-purpose insurer do not face identical requirements. Instead, their capital and supervision depend on the scale and nature of their risks.

By contrast, the IFSCA draft places several forms of mutual and P&I business under common provisions. However, these entities may carry very different liabilities.

For example, a smaller member-owned mutual covering a limited group does not create the same exposure as a P&I Club covering tankers against pollution and wreck-removal claims.

Therefore, IFSCA should create separate schedules for:

  • general mutual insurers;
  • mutual reinsurers;
  • Mutual P&I Clubs;
  • fixed-premium P&I insurers; and
  • branches of established foreign P&I Clubs.

Moreover, each schedule should contain category-specific requirements for capital, governance, reporting, claims and reinsurance. As a result, the framework would become more proportionate and easier to apply.

Singapore: A Licence Needs a Maritime Ecosystem

The Monetary Authority of Singapore’s Financial Institutions Directory includes regulated marine mutual and P&I insurance entities.

However, Singapore’s success does not arise from insurance licensing alone. It also has a major port, global shipping companies, banks, ship managers, brokers, maritime lawyers, arbitrators, surveyors and casualty-response firms.

Therefore, Singapore provides an ecosystem lesson for India.

GIFT IFSC will need strong links with Indian ports, the Directorate General of Shipping, shipping companies, ship-leasing entities, maritime arbitration bodies, surveyors, adjusters, salvors, pollution-response organisations and global reinsurers.

Moreover, the ecosystem must work before a major casualty occurs. Consequently, regulated entities should establish practical service arrangements rather than rely only on future contracts.

Otherwise, a registered insurer may have a legal presence but lack the operational network required to manage an international casualty.

International Group: Pooling Is More Than Reinsurance

The International Group of P&I Clubs consists of independent member-owned clubs that share major claims through pooling and jointly purchase large reinsurance protection.

Each club independently underwrites its members. However, large claims move through several connected layers.

These layers generally include:

  • the club’s own retention;
  • member contributions;
  • inter-club pooling;
  • commercial reinsurance;
  • catastrophe protection; and
  • additional calls where permitted.

The International Group’s pooling and reinsurance structure therefore shows that P&I capacity involves much more than buying one reinsurance policy.

Consequently, IFSCA must clearly distinguish ordinary commercial reinsurance from participation in an international claims pool.

Moreover, the regulator should not assume that a newly registered club will automatically gain access to an established pool. Instead, the club will need to prove its underwriting quality, claims capacity, governance and financial strength.

Critical Issue One: The Legal Form Is Unclear

The central legal question is straightforward: what kind of entity will actually receive the licence?

The draft refers to foreign insurers, foreign mutual companies, body corporates, cooperative societies, public companies, wholly owned subsidiaries and associations of persons.

However, these entities operate under different rules concerning ownership, voting, capital, insolvency and asset distribution.

For example, a company limited by shares has shareholders. By contrast, a cooperative has members, while an association of persons may not have share capital. Meanwhile, a foreign branch remains legally connected with its overseas parent.

Therefore, the draft should clearly map each regulatory category to a permitted legal form.

Suggested Legal-Form Matrix

Regulatory category Permitted legal form Ownership basis Main capital form
Foreign MIIO branch Branch of licensed foreign mutual Foreign parent Assigned capital
Incorporated MIIO Company, cooperative or approved mutual body Members Member funds and reserves
Mutual P&I Club Incorporated mutual association Shipowner-members Calls, reserves and eligible funds
Non-Mutual P&I insurer Company or foreign branch Shareholders or parent Equity or assigned capital

In addition, the regulations should explain how each form will enter contracts, own assets, admit members and face insolvency proceedings.

Without this clarification, applicants may not know whether company law, cooperative law or association rules govern their structure.

Consequently, different applicants may interpret the same provisions differently. Therefore, legal-form certainty should come before registration begins.

Critical Issue Two: Equity Capital May Not Fit a Mutual Association

The draft describes a mutual insurer as a non-profit entity owned by its members. However, it also requires certain incorporated applicants to comply with paid-up equity-capital requirements under the Insurance Act, 1938.

These requirements fit a company limited by shares more naturally. Nevertheless, they may not fit every cooperative or mutual association.

Therefore, IFSCA should create a separate concept of eligible mutual capital.

In particular, the final rules should explain the treatment of:

  • initial member funds;
  • guarantee capital;
  • retained surplus;
  • contingency reserves;
  • subordinated instruments;
  • callable member commitments; and
  • unpaid supplementary calls.

Moreover, the International Association of Insurance Supervisors’ guidance on mutual and cooperative insurers recognises that mutual bodies may use different ownership and financial-support structures.

Accordingly, the final rules should adapt capital concepts to the mutual model instead of merely importing shareholder-company requirements.

At the same time, flexibility should not weaken solvency. Therefore, only resources that can genuinely absorb losses should qualify as regulatory capital.

Critical Issue Three: USD 1.5 Million Is Only an Entry Floor

The draft requires a foreign branch to maintain assigned capital equal to USD 1.5 million in a freely convertible currency.

However, the capital may remain earmarked in the applicant’s home country. Therefore, IFSCA must determine whether those funds will remain quickly accessible after a major casualty.

For example, a serious accident may require immediate spending on pollution control, crew care, surveys, salvage, vessel-release security, wreck removal and interim compensation.

Consequently, IFSCA should require additional financial resources according to the applicant’s actual business plan.

In addition, it should consider:

  • a local liquidity reserve;
  • enforceable parental guarantees;
  • collateral arrangements;
  • claims-payment trusts; or
  • another reliable payment mechanism.

Moreover, the required resources should rise when the club retains more risk before reinsurance responds.

Thus, assigned capital should remain only the first layer of financial protection.

Critical Issue Four: Reinsurance and Pooling Provisions Conflict

One part of the draft appears to require a Mutual P&I Club to maintain reinsurance and participate in international pools.

However, Regulation 27 later states that a P&I entity may participate in domestic or international pools.

Therefore, the draft leaves several questions unanswered.

First, is international pool participation compulsory? Second, can a new club rely only on commercial reinsurance? Third, what makes a pool acceptable to IFSCA?

Moreover, admission to an established pool depends on acceptance by its existing participants. Consequently, IFSCA cannot guarantee pool membership merely by making it a licensing condition.

The final rules should separately define:

  • mandatory reinsurance;
  • optional claims pooling;
  • approved pool participation;
  • catastrophe protection;
  • reinsurance concentration;
  • counterparty standards; and
  • treatment of disputed reinsurance recoveries.

In addition, the regulator should examine whether reinsurance protection remains effective during sanctions, war or financial stress.

Otherwise, a club may appear protected on paper while lacking usable protection when a major claim occurs.

Critical Issue Five: International Recognition Is Not Automatic

The draft requires P&I entities to follow international maritime conventions and maintain recognition from relevant authorities.

However, it does not explain how a newly registered IFSC P&I Club will obtain that recognition.

This is the proposal’s largest commercial challenge.

Under several maritime conventions, ships must carry proof of insurance or other financial security. Accordingly, maritime authorities often rely on documents known as Blue Cards when issuing compulsory insurance certificates.

The International Maritime Organization’s Blue Card guidance explains how States may verify documentation issued by P&I Clubs and other insurance providers.

Similarly, the IMO Bunkers Convention requires qualifying ships to maintain insurance or other financial security for bunker-oil pollution liability.

Therefore, an IFSCA registration certificate will not automatically guarantee acceptance at foreign ports.

Recognition Roadmap Needed

IFSCA should work with:

  • the Directorate General of Shipping;
  • Indian flag authorities;
  • foreign maritime administrations;
  • port States;
  • classification societies;
  • reinsurers; and
  • international maritime bodies.

Moreover, IFSCA should publish a process covering Blue Cards, convention certificates, insurer verification and evidence of claims-paying ability.

In addition, it should maintain a public register showing each recognised entity and the types of financial-security documents it may issue.

Until then, the legal licence may remain stronger than the club’s commercial acceptance.

Critical Issue Six: Supplementary Calls Need Stronger Safeguards

A mutual insurer may ask its members for additional money when claims exceed the amount initially collected.

Although this mechanism helps a club manage unexpected losses, it can also create an open-ended burden for smaller members.

The draft allows the club’s constitution or rules to determine the basis of a call. However, the regulations do not themselves require a clear maximum liability.

Therefore, the final rules should require:

  • disclosure of maximum call exposure;
  • a standard calculation method;
  • advance written notice;
  • reasons for extraordinary calls;
  • member approval above a stated threshold;
  • instalment options;
  • treatment of former members;
  • treatment of calls after policy expiry;
  • an internal review process; and
  • consequences of non-payment.

In addition, every quotation should clearly state whether the amount is a fixed premium or merely an initial call.

Moreover, members should receive numerical examples showing how supplementary calls may arise. Consequently, shipowners could compare mutual and fixed-premium cover on an informed basis.

Critical Issue Seven: Voting Rights Remain Too General

The draft gives members the right to participate and vote. It also supports fair elections and member involvement in surplus distribution.

These principles are welcome. Nevertheless, the draft does not explain how voting power will operate in practice.

For example, it does not state whether each member receives one vote, whether votes depend on premium or insured tonnage, or how connected companies will be grouped.

Similarly, it does not explain electronic voting, proxy voting, minority nominations or members’ rights to inspect records.

Consequently, a few large fleet owners could dominate smaller members.

Therefore, IFSCA should balance financial contribution with mutual equality. Moreover, it should protect minority members from connected-party control.

At the same time, the rules should prevent members with very small exposure from controlling decisions that create major financial liabilities. Accordingly, the voting model may need both equality safeguards and exposure-based limits.

Critical Issue Eight: Third-Party Victims Need Separate Rights

P&I insurance often covers claims made by people who do not belong to the club.

These claimants may include:

  • crew members;
  • passengers;
  • cargo owners;
  • port authorities;
  • coastal residents;
  • pollution victims; and
  • owners of damaged property.

However, the draft’s governance rules focus mainly on members and policyholders.

Although this focus reflects mutual ownership, it does not fully address the public purpose of liability insurance.

Therefore, IFSCA should introduce a third-party claimant charter covering:

  • emergency contact arrangements;
  • claim acknowledgement;
  • document requirements;
  • claim-status updates;
  • interim payments;
  • reasons for rejection;
  • complaint review;
  • mass-casualty response;
  • direct-action rights where legally available; and
  • protection during insolvency or cancellation.

Moreover, vulnerable claimants should not have to understand the internal structure of a foreign branch or mutual club before seeking compensation.

As a result, the framework would protect not only club members but also victims of maritime accidents.

Critical Issue Nine: Governance Is Strong but Incomplete

The proposed governance structure is one of the draft’s stronger features.

A Mutual P&I Club must have a majority of directors elected by members. In addition, it must include independent directors, an actuarial expert and people with maritime or insurance knowledge.

Furthermore, it must establish a Risk and Underwriting Committee, an Audit Committee and a Claims Committee.

However, the draft does not specify:

  • the minimum number of independent directors;
  • committee-chair independence;
  • director tenure;
  • conflict-of-interest rules;
  • connected-member transactions;
  • recusal in connected claims;
  • whistle-blower safeguards;
  • Board evaluation; or
  • management remuneration controls.

These gaps matter because the club’s members, directors and insured interests may overlap.

Therefore, IFSCA should add detailed conflict-management and independence provisions.

Moreover, large claims involving directors or connected members should face enhanced independent review. Consequently, the claims process would remain fair even when powerful members have direct interests in the outcome.

Critical Issue Ten: Claims Rules Need Measurable Standards

The draft requires P&I entities to maintain access to surveyors, adjusters, maritime lawyers, technical experts and emergency specialists.

However, it does not set measurable service standards.

A credible P&I Club must respond immediately after a collision, oil spill, vessel detention, crew injury or wreck.

Therefore, the final regulations should require:

  • a 24-hour casualty-response facility;
  • approved correspondent networks;
  • regional response arrangements;
  • minimum claims-staff experience;
  • fixed reporting deadlines;
  • emergency-payment procedures;
  • annual response exercises;
  • litigation and reserve reviews; and
  • Board reporting on major claims.

Moreover, the club should test its emergency plan regularly.

Otherwise, an entity may comply formally while lacking the capacity to handle a real emergency. Consequently, IFSCA should examine operational readiness before granting final permission to commence business.

Critical Issue Eleven: Sanctions Rules Need a Legal Hierarchy

The draft requires screening of members, vessels, beneficial owners, counterparties and transactions.

This requirement is necessary because maritime sanctions may affect cargo, ports, ships, banks, owners, insurers and reinsurers.

However, the expression “applicable sanctions laws” remains unclear.

For example, a voyage may be lawful under Indian law but restricted elsewhere because of the payment currency, banking route, reinsurer, vessel owner or destination port.

Therefore, the final regulations should distinguish:

  • Indian legal prohibitions;
  • United Nations sanctions;
  • foreign laws directly binding on the entity;
  • contractual sanctions restrictions;
  • reinsurance exclusions; and
  • voluntary commercial risk decisions.

Moreover, the insurer should disclose when it refuses cover because of contractual or commercial concerns rather than a direct legal prohibition.

As a result, regulated entities and members would better understand when cover must be refused and when a decision reflects private risk policy.

Critical Issue Twelve: Financial Reporting Needs One Common Format

An incorporated IFSC entity would follow the April-to-March financial year. By contrast, a foreign branch may follow the accounting standards and reporting year of its home country.

Although this flexibility may reduce compliance costs, it can make regulatory comparison difficult.

Therefore, IFSCA should require a standard regulatory return covering:

  • premiums and advance calls;
  • supplementary calls;
  • gross and net claims;
  • outstanding liabilities;
  • incurred-but-not-reported reserves;
  • reinsurance recoverables;
  • combined ratio;
  • insured tonnage;
  • risk concentration;
  • solvency coverage;
  • major casualties; and
  • related-party transactions.

Moreover, the return should separately identify mutual contributions and fixed premiums.

Consequently, IFSCA could compare different entities even when their audited accounts follow different home-country formats.

In addition, public disclosure of basic solvency and claims data would help members make better decisions.

Critical Issue Thirteen: Enforcement Powers Need Safeguards

IFSCA may inspect records and premises without prior notice. It may also request information, investigate violations and suspend or cancel registration.

Strong powers are understandable because an insurance failure may harm members, victims and the IFSC’s reputation.

Nevertheless, broad powers also require procedural safeguards.

Therefore, the final rules should provide for:

  • written inspection authority;
  • protection of legally privileged material;
  • confidentiality of commercial records;
  • recorded reasons for urgent action;
  • graded treatment of minor and serious defaults;
  • corrective-action plans;
  • proportionate penalties;
  • access to relied-upon material; and
  • clear appeal rights.

Moreover, the regulations should distinguish financial weakness from technical reporting failures.

Accordingly, the framework can remain strict without becoming unpredictable.

Major Conflicts and Drafting Errors

Provision Problem Suggested correction
Regulation 9 Allows 12 months to start business Retain one clear commencement period
Regulation 38 Refers to failure after 180 days Align it with Regulation 9
Regulation 4(13) Appears to require international pool participation Clarify mandatory elements
Regulation 27 Treats pool participation as optional Remove the conflict
Regulation 15 Deals with surplus distribution It does not create a deposit
Regulation 41(2) Refers to a deposit under Regulation 15 Correct the cross-reference
Regulation 24 Moves from sub-regulation (3) to (5) Restore or renumber the provision
Regulation 38 Uses “Net Worth” Align it with “Net Owned Fund”
Applicant definition Does not match all later entity categories Consolidate eligibility rules

The 180-Day and 12-Month Conflict

Regulation 9 gives a registered entity 12 months to issue its first policy or enter its first reinsurance contract. Moreover, it permits an extension up to an overall limit of 18 months.

However, Regulation 38 treats failure to start business within 180 days as a ground for cancellation.

Therefore, both periods cannot govern the same registration. IFSCA must adopt one commencement rule and apply it consistently.

Moreover, the period should reflect the practical time required to arrange reinsurance, recruit staff, build claims systems and secure international recognition.

Incorrect Deposit Reference

Regulation 41 allows IFSCA to issue an order concerning a deposit under Regulation 15 after suspension or cancellation.

However, Regulation 15 deals with the distribution of surplus. It does not establish a deposit requirement.

Consequently, the cross-reference appears incorrect and must be replaced.

Moreover, the final text should identify the actual provision governing deposits, security or capital disposal after cancellation.

Missing Sub-Regulation Number

Regulation 24 moves from sub-regulation (3) to sub-regulation (5).

Therefore, either a provision is missing or the numbering is incorrect.

Although this may appear minor, errors in financial-reporting and enforcement provisions can create legal uncertainty. Accordingly, the entire draft requires a final cross-reference and numbering review.

Who May Benefit From the Framework?

Foreign Mutual Insurers

Established foreign mutual insurers could gain a branch route into GIFT IFSC while using parts of their home-country solvency framework.

Moreover, they could access Indian and regional shipping business through a regulated international financial centre.

Indian Shipowners and Charterers

Indian shipping businesses could gain more insurance choices. Moreover, they may receive a greater role in governing member-owned risk arrangements.

However, the benefit will depend on whether the new cover gains international recognition.

GIFT IFSC

The framework could attract insurance premiums, reinsurance, claims work, actuarial services, maritime law and technical-risk services.

In addition, it could strengthen the wider ship-leasing and maritime-finance ecosystem.

Maritime Professionals

Surveyors, loss adjusters, lawyers, casualty responders and safety experts may gain new professional opportunities.

However, these benefits will arise only when the market trusts the insurers and foreign authorities accept their documents.

Main Risks

Regulatory Arbitrage

An overseas branch may rely on assets held outside India without maintaining enough locally accessible resources for urgent claims.

Therefore, IFSCA must test whether the branch can pay immediately rather than merely show overseas solvency.

Member Dominance

Large shipowners may control voting, Board appointments, claims policy and surplus distribution.

Consequently, minority and smaller members need specific governance safeguards.

Open-Ended Financial Calls

Smaller members may face additional payments that they did not fully understand when joining the club.

Therefore, disclosure requirements and call limits must form part of the regulations.

Reinsurance Failure

A club may appear financially secure. However, it may still face difficulty when a reinsurer disputes or delays payment.

Accordingly, IFSCA should assess both the amount and reliability of reinsurance protection.

Lack of International Recognition

Foreign authorities may refuse to accept documents issued by a new or lightly established club.

Consequently, the licence may have limited commercial value without a recognition strategy.

Weak Claimant Protection

Crew members, pollution victims and other third parties may face delays because the framework does not provide separate service standards.

Therefore, the final rules should give claimants clear and enforceable rights.

Recommendations Before Final Notification

Define Every Permitted Legal Form

First, IFSCA should state which company, cooperative, branch or mutual-association form may be used for each regulatory category.

Moreover, it should explain the consequences for ownership, member liability, asset ownership and insolvency.

Create Separate Regulatory Schedules

Second, MIIOs, Mutual P&I Clubs and fixed-premium P&I insurers should not rely entirely on one common framework.

Instead, each category should have separate capital, governance, reporting and claims requirements.

Introduce Risk-Based P&I Capital

Third, the USD 1.5 million requirement should remain only an entry floor.

In addition, capital should reflect fleet size, vessel type, geography, pollution exposure, claims retention and reinsurance.

Define Eligible Mutual Funds

Moreover, the rules should explain the treatment of member contributions, retained surplus, reserves, guarantees, subordinated funds and supplementary calls.

At the same time, only reliable loss-absorbing resources should qualify.

Require Accessible Claims Resources

In addition, foreign branches should maintain local liquidity, collateral, a parental guarantee or another enforceable payment mechanism.

Consequently, urgent claims would not depend entirely on overseas transfers.

Publish an International Recognition Plan

Similarly, IFSCA and the Directorate General of Shipping should establish a process for Blue Cards, compulsory insurance certificates and foreign verification.

Moreover, the process should begin before licences are issued.

Protect Members Against Unexpected Calls

Furthermore, every policy and club rule should state the maximum call, calculation method, notice period and dispute process.

In addition, applicants should provide numerical examples before members join.

Introduce a Third-Party Claimant Charter

At the same time, claimants should receive fixed timelines, reasons for decisions, emergency assistance and complaint rights.

Consequently, the framework would protect victims as well as insured members.

Strengthen Board Independence

In addition, the final rules should set independence ratios, committee requirements, conflict rules and recusal standards.

Moreover, connected claims should face independent review.

Clarify Sanctions Compliance

Likewise, IFSCA should identify the legal hierarchy between Indian law, United Nations sanctions, directly applicable foreign law and contractual restrictions.

As a result, insurers could separate legal prohibition from commercial caution.

Publish a Revised Consultation Draft

Finally, IFSCA should correct the structural problems before final notification instead of relying mainly on later circulars and subsidiary instructions.

Therefore, a revised consultation draft would improve legal certainty, stakeholder confidence and the quality of the final regulations.

DSLA Legal and Regulatory Assessment

Dinesh Singh Law Associates considers the proposed framework necessary and forward-looking.

However, a mutual insurer is not simply an ordinary insurer that gives policyholders voting rights. Instead, its ownership, capital, surplus, member calls and insolvency arrangements differ fundamentally from those of a shareholder-owned company.

Likewise, a P&I Club is not merely a marine insurance company. Rather, it combines mutual governance, underwriting, pooling, reinsurance, casualty response, claims handling and international recognition.

Therefore, the final regulations must answer four legal questions clearly:

  1. What legal form owns and controls the insurance undertaking?
  2. What assets remain immediately available after a major casualty?
  3. What is the maximum financial liability of each member?
  4. How will foreign States and ports recognise the insurance cover?

Moreover, the regulations must explain what happens when a member leaves, a club becomes insolvent or a reinsurer refuses payment.

Until the rules answer these questions, the framework will remain an enabling proposal rather than a complete operating code.

ABC Live Overall Assessment

IFSCA has identified a genuine market opportunity.

The proposal can support India’s wider maritime strategy by connecting ship leasing, marine insurance, reinsurance, claims management and dispute resolution within GIFT IFSC. Moreover, it could reduce India’s dependence on foreign centres for parts of the maritime value chain.

However, the draft currently relies heavily on future instructions, home-country arrangements and broad regulatory discretion. Furthermore, it treats international recognition as a compliance duty without providing a practical route to obtain that recognition.

Most importantly, the final framework must separately protect:

  • the member-policyholder;
  • the solvency of the insurance entity; and
  • the third-party victim.

At present, the draft addresses the first two only partly. Meanwhile, it gives even less detail on the third.

Therefore, IFSCA should issue a corrected and expanded consultation draft before notifying the final regulations.

In conclusion, the policy direction is sound. Nevertheless, the legal structure, capital model, claims safeguards and international recognition process need substantial improvement.

Public Consultation Deadline

IFSCA has invited comments and suggestions on the draft by 12 July 2026.

Therefore, insurers, shipowners, maritime lawyers, reinsurers, port bodies and industry associations have a limited period in which to identify drafting and implementation concerns.

Stakeholders must submit their comments in Microsoft Word or Microsoft Excel format using the table provided with the consultation paper.

How We Verified

ABC Live reviewed the complete 35-page IFSCA consultation paper, including its definitions, eligibility rules, registration process, capital requirements, governance provisions, P&I obligations, fee structure, enforcement procedure and Board committee schedule.

In addition, ABC Live compared the draft with:

  • the Insurance Act, 1938;
  • International Association of Insurance Supervisors guidance on mutual insurers;
  • the United Kingdom’s Solvency UK framework;
  • the European Union’s Solvency II framework;
  • Bermuda’s risk-based insurance system;
  • Singapore’s register of marine mutual entities;
  • the International Group’s pooling and reinsurance model; and
  • International Maritime Organization guidance on compulsory insurance and Blue Cards.

Moreover, DSLA provided legal research on mutual ownership, capital structure, member liability, procedural fairness and drafting conflicts. However, ABC Live retains full editorial responsibility.

Sources and Resources

Indian Regulatory Sources

International Regulatory Sources

Maritime Insurance Sources

Related ABC Live Reports

ABC Live — Making Complex Public Issues Simple.