Govt approves maritime insurance pool
As the conflict in West Asia disrupts crude and gas supply chains — partly due to reduced vessel movement linked to insurance constraints — the Union Cabinet, on Saturday, approved creation of the Bharat Maritime Insurance Pool (BMI pool) with a sovereign guarantee of Rs 12,980 crore to facilitate continuous maritime insurance coverage.
The decision comes against the backdrop of increasing uncertainty in global shipping insurance, with premiums surging and availability becoming inconsistent due to geopolitical tensions. Recently, conflict in West Asia has disrupted cargo movements in and around the Strait of Hormuz, with many shipowners halting operations. Insurance companies have also become cautious, with some unwilling to provide coverage due to heightened war-related risks.
Traditionally, Indian ships rely heavily on international insurers, particularly the International Group of Protection and Indemnity Clubs (IGP&I) and Lloyd’s of London, for third-party liability coverage.
Ships transporting goods such as oil, gas, food, and other commodities require insurance to protect against risks including accidents, piracy, war, oil spills, and cargo damage.
Top sources said this reliance exposes India’s shipping trade to vulnerabilities, especially in scenarios where coverage may be withdrawn due to sanctions and political developments.
The scheme aims to address rising insurance premiums and tighter approvals for shipping cover, which are currently being granted on a case-by-case basis.
This will also ensure 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 through 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 the continuous availability of insurance.
Further, Indian vessels depend heavily on the International Group of Protection and Indemnity (IGP&I) Club for P&I insurance covering third-party liabilities such as 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 coverage pool to maintain sovereignty and continuity of trade in the face of withdrawal of coverage due to sanctions or due to geopolitical tensions,” the Government said in a statement.
The pool will cover major maritime risks, including hull and machinery, cargo, protection and indemnity (P&I), and war risks. The policies will be issued by pool members, leveraging the Pool’s combined underwriting capacity of around Rs 950 crore. Coverage will apply to India-flagged vessels, India-controlled ships, and vessels with India as the origin or destination. The proposed framework will run for 10 years, with provision for extension up to 15 years.
