The Union Cabinet meeting, chaired by Prime Minister Narendra Modi, on Saturday approved the creation of a sovereign guarantee-backed maritime insurance pool, Bharat Maritime Insurance Pool (BMI), worth ₹12,980 crore amid rising underwriting costs due to the West Asia war, a move aimed at cutting Indian merchant shippers’ reliance on global risk-coverage firms, including reinsurers.
The decision will ease tight insurance conditions and help lower costs for Indian vessels as global underwriters have hiked risk-mitigation charges to historic highs due to the war in West Asia.
India carries out nearly 95% of trade by volume through the sea.
The pooled insurance package will specifically cover war-risk insurance for vessels operating in conflict zones and high-risk maritime corridors, a coverage aimed at securing supplies amid considerable uncertainties in the Persian Gulf through which most of India’s imported oil and gas flows.
Several major reinsurers including the State-backed reinsurer General Insurance Corporation Of India (GIC Re) have sharply raised premiums and scrapped many coverages amid heightened risks and a protracted conflict in West Asia. Reinsurers are a critical part of the industry, which help spread risks by providing insurance to insurers.
The pool will be available for 10 years and can be extended by five years, Union information and broadcasting minister Ashwini Vaishnaw said. “The insurance cover will be given to India-flagged and India-controlled vessels and vessels originated from or destined to India,” the minister said during the Cabinet briefing.
Shipping minister Sarbananda Sonowal hailed the move, saying: “This landmark decision ensures that India now has the sovereign capacity to safeguard its maritime trade, even in the most challenging global scenarios.”
The pool cleared by the Cabinet is aimed at maintaining continuity of risk coverage especially during times of geopolitical uncertainties, thereby “stabilising trade flows and reducing cost pressures on exporters and logistics stakeholders”, an official said.
The pool will extend insurance protection to vessels carrying cargo between international ports and India in both directions.