Govt launches $1.5 bn Bharat Maritime Insurance Pool: What is it and why it matters

The government on Tuesday launched a USD 1.5 billion domestic maritime insurance pool backed by a sovereign guarantee of USD 1.4 billion to ensure uninterrupted insurance cover for Indian ships and cargo amid heightened geopolitical tensions in the Middle East.

Named the “Bharat Maritime Insurance Pool (BMIP)”, the facility will provide coverage for marine hull and machinery, cargo, protection and indemnity (P&I), and war risks for Indian-flagged or controlled vessels, as well as ships carrying cargo to and from India.

The sovereign guarantee, amounting to USD 1.4 billion or ₹12,980 crore, will serve as a contingent backstop if claims exceed the pool’s own underwriting and reinsurance capacity, the finance ministry said in a statement.

Insurance safeguard against geopolitical risks

The scheme has been launched at a time when escalating tensions in West Asia have increased the risk of disruptions in marine insurance and reinsurance, particularly for vessels operating in designated high-risk war zones.

The ministry said shipping operations and trade flows can be severely disrupted if international insurers and reinsurers withdraw coverage because of sanctions or geopolitical conflicts.

India's shipping industry is particularly dependent on overseas insurance providers and the International Group (IG) Protection and Indemnity Clubs for third-party liability cover, including oil pollution, wreck removal, cargo damage, crew injury and collision liabilities.

How the BMIP will function

The new pool, administered by General Insurance Corporation of India (GIC Re), is expected to reduce this dependence and strengthen India’s sovereign control over maritime trade and risk management.

Policies will be issued by domestic insurers that are members of the pool, using their combined underwriting capacity. The risks will then be reinsured among all participating insurers in proportion to their commitments.

For claims up to USD 100 million, the pool will settle losses from its own resources. For larger claims, the sovereign guarantee will be invoked only after the pool’s reserves, member contributions and reinsurance arrangements are fully exhausted.

A governing body has been constituted to oversee operations and approve any invocation of the sovereign guarantee. An underwriting committee will be responsible for assessing and pricing risks.

M Nagaraju, Secretary, Department of Financial Services (DFS), formally launched the pool and handed over the first Marine Hull and Machinery War Policy document to Hoger Offshore and Marine Private Limited.

The policy, issued by The New India Assurance Company Limited, provides protection against war-related risks.

A Marine Cargo War Policy was also issued to Vedanta Sterlite Copper Ltd for imports of cable wires, while another policy was extended to Balrampur Chini Mills Ltd.