Cabinet nod for Bharat Maritime Insurance Pool to shield Indian shipping from West Asia conflict

New Delhi: In a major step to shield Indian shipping from soaring global risks following West Asia conflict, the Centre on Saturday approved the creation of the 'Bharat Maritime Insurance Pool' (BMI Pool), backed by a sovereign guarantee of Rs 12,980 crore, to ensure uninterrupted maritime insurance coverage.

The decision comes as shipping insurance premiums have skyrocketed by nearly 1,000 per cent due to the ongoing regional tensions.

The Union Cabinet chaired by Prime Minister Narendra Modi took this decision. Announcing the decision, Union Minister for Information and Broadcasting Ashwini Vaishnaw said that 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.

"To set up an arrangement addressing this shortcoming, we have introduced the Bharat Maritime Insurance Pool... A sovereign guarantee fund of Rs 12,980 crores will be created for maritime insurance. The insurance period will be valid for 10 years and extendable upto 15 years...," said Vaishnaw.

The Bharat Maritime Insurance Pool will give India a domestic safety net for shipping risks, especially when global insurers or Protection and Indemnity (P&I) clubs become cautious due to wars, sanctions, or geopolitical tensions.

"The pool covers all maritime risks like Hull and Machinery, Cargo, P&I and War risk, covers vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors, " a statement from the government said.

The government’s decision is expected to significantly boost India’s energy imports by providing domestic insurance cover for tankers carrying crude oil, LNG and other critical commodities.

The move will also strengthen India’s ambition to expand its shipping, ports and global trade footprint by offering reliable financial risk backing, officials said.

At present, a large part of India’s maritime liability insurance is sourced from overseas Protection and Indemnity (P&I) clubs. The domestic pool aims to retain risk management and premiums within the country.

"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," said the statement.

Further, 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, said the statement.