Govt okays Rs 13k-cr Bharat Maritime Insurance Pool amid Hormuz tensions
New domestic pool to ensure affordable maritime insurance, reduce reliance on global insurers, and boost India’s self-reliance amid geopolitical risks
The government on Saturday (April 18) approved a proposal to create a domestic insurance pool, Bharat Maritime Insurance (BMI) Pool, with a sovereign guarantee of Rs 12,980 crore to facilitate continuous maritime insurance coverage.
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.
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Information and Broadcasting Minister Ashwini Vaishnaw informed this while briefing on decisions taken at the Cabinet meeting chaired by Prime Minister Narendra Modi.
What the pool will cover
The government has approved the formation of 'Bharat Maritime Insurance 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 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 specialised marine underwriting, claims management and legal expertise within India.
Push for maritime self-reliance
A governing body 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.
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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.
Further, there is high dependence of Indian vessels on 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.
(With agency inputs)