The Union Cabinet meeting chaired by Prime Minister Narendra Modi on Saturday approved the creation of a sovereign guarantee-backed marine insurance pool, Bharat Marine Insurance Pool (BMI). ₹The move, worth Rs 12,980 crore, aims to reduce Indian merchant shippers’ dependence on global risk-coverage firms, including reinsurers, amid rising underwriting costs due to the West Asia war.
The decision will ease stringent insurance conditions and help reduce costs for Indian ships as global underwriters have raised risk-mitigation charges to historic highs due to the war in West Asia.
India conducts about 95% of its trade by volume through sea.
The pooled insurance package will specifically cover war-risk insurance for vessels operating in conflict zones and high-risk sea 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 state-backed reinsurer General Insurance Corporation of India (GIC RE), have sharply increased premiums and eliminated many coverages amid rising risks and protracted conflict in West Asia. Reinsurers are an important part of the industry, helping insurers spread risk by providing insurance.
Union Information and Broadcasting Minister Ashwini Vaishnav said the pool will be available for 10 years and can be extended by up to five years. “The insurance cover will be extended to India-flagged and India-controlled ships and ships originating from or transiting through India,” the minister said during a cabinet briefing.
Shipping Minister Sarbananda Sonowal lauded the move, saying, “This historic decision ensures that India now has the sovereign ability to safeguard its maritime trade even in the most challenging global scenarios.”
The cabinet-approved pool is aimed at maintaining continuity of risk coverage, especially at times of geopolitical uncertainties, which will “stabilise trade flows and reduce cost pressure on exporters and logistics stakeholders”, an official said.
This pool will provide insurance protection to vessels carrying cargo in both directions between international ports and India.
