With global shipping routes disrupted due to the West Asia conflict, the Centre Saturday announced the creation of a domestic insurance pool, Bharat Maritime Insurance Pool, with a sovereign guarantee of Rs 12,980 crore to facilitate continuous insurance coverage to all maritime risks including hull, machinery, cargo, protection and indemnity (P&I) and war.
This was decided at a meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi.
Briefing reporters after the Cabinet meeting, Union Information and Broadcasting Minister Ashwini Vaishnaw said, “A big factor of insurance, which the world understood during the West Asia conflict, is that insurers and reinsurers were not ready to insure the ships going to West Asia… In view of this, a decision has been taken to create a sovereign guarantee fund of Rs 12,980 crore to facilitate maritime insurance. It will cover all maritime risks including hull, machinery, cargo, P&I and war. Vessels with the India flag will be covered under this.”
An official statement issued after the Cabinet meeting stated: “The pool ensures that Indian trade continues to have access to affordable insurance for vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors.”
“With increased global volatility and geopolitical instability, maritime trade has been impacted with increased risk of losses for cargo and vessels resulting in increased insurance costs and uncertainty in continuous availability of insurance,” it stated.
“Further, there is high dependence of Indian vessels on the International Group of Protection and Indemnity (IGP&I) Club for P&I insurance covering third-party liabilities like oil pollution liability, wreck removal, cargo damage, crew injury and repatriation, collision liabilities and so on. Accordingly, there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in face of withdrawal of coverage due to sanctions or due to geopolitical tensions,” it said.
The “Government has approved formation of ‘Bharat Maritime Insurance Pool’ (BMI pool) for Indian flagged or controlled vessels or vessels destined to or starting from India, backed by a sovereign guarantee. The pool would cover all maritime risks like hull and machinery, cargo, P&I and war risk,” the statement said.
“The policies will be issued by insurers that are Pool members, using the combined underwriting capacity of the Pool, which would be around Rs 950 crore. The Pool will help to manage liability insurance locally, tailored to Indian shipping conditions and regulatory requirements, develop specialized marine underwriting, claims management and legal expertise within India,” it said.
“A Governing Body constituted for this pool would oversee the formation and functioning of the pool. The rationale for providing a sovereign guarantee to the proposed domestic insurance entity is rooted in the objectives of strengthening self-reliance, sanctions resilience and ensuring greater sovereign control,” the statement said.
Speaking to The Indian Express, Kasturi Sengupta, Secretary General, General Insurance Council, said, “After the Strait of Hormuz was closed, all the foreign reinsurers had stopped giving war cover protection to general insurers. GIC Re, the Indian reinsurer, had continued their support on the treaty but in the facultative agreements that happened, all the foreign reinsurers had withdrawn the war cover – in marine cargo and in marine hull. Then there was a necessity of a sovereign guarantee and also the necessity for the Indian market to have their own pool so that if any claim comes as regards to war and allied risks in these high risk-areas (Strait of Hormuz, Gulf of Aden and adjoining areas) they can be taken care of.”
She said the pool has been formed for this reason, and that it has a capacity of almost $100 million. She said there are three reinsurers in it – GIC Re, Allianz-Jio Re and Valueattics Re – who, along with other general insurers, have given capacity.
Union Information and Broadcasting Minister Ashwini Vaishnaw said, “A big factor of insurance, which the world understood during the West Asia conflict, is that insurers and reinsurers were not ready to insure the ships going to West Asia". (Image generated using AI) 
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