New Delhi: In a move aimed at safeguarding India’s maritime trade and shipping operations amid escalating tensions in the Middle East, the Department of Financial Services (DFS), Ministry of Finance, on Tuesday launched the ‘Bharat Maritime Insurance Pool’ (BMIP) with a total underwriting capacity of $1.5 billion and a sovereign guarantee support of $1.4 billion (around Rs 12,980 crore).
The initiative is designed to ensure uninterrupted maritime insurance coverage for Indian-flagged or Indian-controlled vessels, as well as ships carrying cargo to and from India, particularly in high-risk and war-prone zones where global insurers and reinsurers may withdraw support due to sanctions or geopolitical uncertainties.
The launch event was chaired by DFS Secretary M. Nagaraju, who also handed over the first Marine Hull & Machinery War Policy document issued under the BMIP framework to M/s Hoger Offshore and Marine Private Limited. The policy, issued by The New India Assurance Company Limited, provides financial protection against war-related risks while operating in high-risk maritime regions.
A Marine Cargo War Policy was also presented to Vedanta Sterlite Copper Limited for the import of cable wires, while another policy was issued to Balrampur Chini Mills Limited.
The BMIP will cover a wide range of maritime risks, including Hull and Machinery insurance, Cargo insurance, Protection and Indemnity (P&I) insurance, and War Risk insurance. The move comes against the backdrop of growing concerns that sanctions and geopolitical conflicts can lead foreign insurers and reinsurers to suspend or withdraw coverage for vessels or cargo linked to sensitive regions.
Officials said the initiative would reduce India’s dependence on international insurance markets, particularly the International Group (IG) P&I Clubs that currently dominate third-party maritime liability coverage globally. P&I insurance typically covers liabilities arising from oil pollution, wreck removal, cargo damage, crew injuries, collision liabilities and repatriation expenses.
Under the new framework, domestic insurers participating in the pool will issue policies using the combined underwriting capacity of the BMIP. Risks will then be reinsured among pool members in proportion to their committed capacities. State-owned reinsurer General Insurance Corporation of India (GIC Re) has been appointed as the pool administrator and will oversee reporting, reinsurance arrangements and operational performance.
To ensure oversight and prudent risk management, the government has constituted a Governing Body to supervise the functioning of the pool, including approvals related to the invocation of the sovereign guarantee. An Underwriting Committee has also been established to ensure technically sound and consistent underwriting practices.
According to the framework, claims up to $100 million will be serviced through the pool’s own resources, including reserves, member contributions and reinsurance arrangements. For claims exceeding $100 million, the sovereign guarantee mechanism will act as a contingent backstop after the exhaustion of all available pool resources.
(IANS)
