Govt clears Bharat Maritime Insurance Pool with Rs 12,980 crore guarantee
The Union Cabinet has approved the Bharat Maritime Insurance Pool with a sovereign guarantee of Rs 12,980 crore to ensure affordable and continuous insurance for Indian maritime trade, reducing dependence on foreign insurers amid rising global volatility and geopolitical risks
New Delhi: The Union Cabinet on Saturday approved the proposal for the creation of a domestic insurance pool, namely ‘Bharat Maritime Insurance Pool’ (BMI pool), with a sovereign guarantee of Rs 12,980 crore to facilitate continuous maritime insurance coverage, according to an official statement.
The statement said the Domestic Insurance Pool addresses global volatility and geopolitical instability, and reduces external insurance dependency of Indian vessels.
“The pool covers all maritime risks like Hull and Machinery, Cargo, P&I and War risk. It covers vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors,” it added.
The statement said the pool will 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 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 higher insurance costs and uncertainty in the continuous availability of insurance.
Further, there is high dependence of Indian vessels on the 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, the statement said there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in the face of withdrawal of coverage due to sanctions or geopolitical tensions.
“In the above backdrop, the government has approved formation of ‘Bharat Maritime Insurance Pool’ (BMI pool) for Indian-flagged or controlled vessels or vessels destined to or starting from India, backed by a sovereign guarantee,” it said.
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 statement said that the pool will help manage liability insurance locally, tailored to Indian shipping conditions and regulatory requirements, and develop specialised marine underwriting, claims management and legal expertise within India.
Further, it said 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.