India has introduced the ‘Bharat Maritime Insurance Pool’ (BMIP) worth $1.5 billion to protect its maritime trade and shipping operations amidst rising tensions in the Middle East. The initiative, backed by a $1.4 billion sovereign guarantee, aims to ensure continuous insurance coverage for Indian-flagged vessels and ships carrying cargo to and from India, especially in high-risk areas. The launch event, led by DFS Secretary M. Nagaraju, marked the issuance of the first Marine Hull & Machinery War Policy under the BMIP to M/s Hoger Offshore and Marine Private Limited.
The BMIP will offer coverage for various maritime risks, including Hull and Machinery insurance, Cargo insurance, Protection and Indemnity (P&I) insurance, and War Risk insurance. This move addresses concerns that geopolitical conflicts and sanctions could prompt global insurers to withdraw coverage for vessels in sensitive regions. The initiative seeks to reduce India’s reliance on international insurance markets, particularly the dominant International Group (IG) P&I Clubs that provide third-party maritime liability coverage globally.
Domestic insurers within the pool will issue policies utilizing the combined underwriting capacity of the BMIP, with risks being reinsured among members based on their committed capacities. The General Insurance Corporation of India (GIC Re) has been appointed as the pool administrator to manage reporting, reinsurance arrangements, and operational performance. To ensure effective oversight and risk management, a Governing Body and an Underwriting Committee have been established by the government.
In case of claims up to $100 million, the pool’s resources, including reserves, member contributions, and reinsurance, will be utilized. For claims exceeding $100 million, the sovereign guarantee mechanism will serve as a contingent backstop after exhausting all available pool resources.
