Amidst West Asia crisis and geopolitical tensions, the Union Cabinet, chaired by Prime Minister Narendra Modi, has sanctioned the establishment of a domestic insurance pool with a sovereign guarantee of Rs 12,980 crore. This initiative aims to provide continuous maritime insurance coverage for Indian flagged or controlled vessels, as well as vessels destined to or starting from India. The pool, named ‘Bharat Maritime Insurance Pool’ (BMI pool), is designed to ensure that Indian trade maintains access to affordable insurance for vessels transporting cargo to and from Indian ports, even through volatile maritime routes.
The BMI pool will offer coverage for various maritime risks including Hull and Machinery, Cargo, P&I (protection and indemnity), and War risk. Policies under this pool will be issued by insurers who are members of the pool, utilizing a combined underwriting capacity of approximately Rs 950 crore. Additionally, the pool will assist in managing liability insurance locally, catering to Indian shipping conditions and regulatory needs. It will also aid in the development of specialized Marine underwriting, claims management, and legal expertise within the country.
Furthermore, a governing body established for the BMI pool will supervise its formation and operations. The government highlights that in the current scenario of heightened global volatility and geopolitical instability, maritime trade faces increased risks leading to higher insurance costs and uncertainty in insurance availability. Indian vessels heavily rely on the International Group of Protection and Indemnity (IGP&I) Club for P&I insurance, covering liabilities such as Oil pollution liability, Wreck removal, Cargo damage, Crew injury and repatriation, and Collision liabilities.
Recognizing the necessity for a domestic maritime risk coverage pool to ensure trade continuity in the event of coverage withdrawal due to sanctions or geopolitical tensions, the government has taken this significant step to safeguard sovereignty and trade continuity.
