Govt launches Bharat Maritime Insurance Pool
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• The Department of Financial Services launched ‘Bharat Maritime Insurance Pool’ of $1.5 billion on May 12.
• With a sovereign guarantee of $1.4 billion (Rs 12,980 crore), it would facilitate continuous maritime insurance coverage, in the backdrop of current West Asia tensions.
• The Pool covers all maritime risks such as hull and machinery, cargo, protection and indemnity (P&I) and war risk for Indian flagged or controlled vessels or vessels destined to or starting from India.
• A governing body has been constituted to oversee the functioning of the Pool, including approvals regarding the invocation of the sovereign guarantee.
• In addition, an Underwriting Committee responsible for ensuring prudent, consistent and technically sound underwriting of risks ceded to the pool has been formed.
• Under the structure, claims up to $100 million will be met through pooled capacity, while higher claims will be backed by the sovereign guarantee after exhausting reserves and reinsurance arrangements.
What is the significance of BMI Pool?
• India’s maritime sector handles over 70 per cent of the country’s trade by volume and nearly 95 per cent by value, yet insurance coverage for this vast ecosystem has largely remained in foreign hands.
• This structural vulnerability became evident during recent disruptions in key shipping corridors such as the Red Sea, Strait of Hormuz and the Gulf of Oman, when several global insurers sharply increased premiums or withdrew coverage altogether, exposing Indian exporters and shipping operators to heightened financial risk and operational uncertainty.
• The BMI Pool is designed to address this gap by ensuring continuity of coverage regardless of geopolitical developments, thereby stabilising trade flows and reducing cost pressures on exporters and logistics stakeholders.
• The pool will extend insurance protection to vessels carrying cargo between international ports and India in both directions.
• It will cover the physical structure of ships under hull and machinery insurance, protect goods in transit through cargo insurance, and address third-party liabilities such as crew injury and environmental damage under protection and indemnity (P&I) coverage.
• In addition, it will provide war risk insurance for vessels operating in conflict zones and high-risk maritime corridors, ensuring Indian shipping remains operational even in volatile regions.
• The move aligns India with major maritime nations such as the United Kingdom, Japan and South Korea, which have already established state-supported insurance frameworks to safeguard national trade interests.
• The initiative also fits within the broader Maritime India Vision 2030, which identifies the development of robust insurance infrastructure as a key pillar in positioning India as a leading global maritime power.
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