The approval for a domestic maritime insurance pool will reduce cost of cover for Indian vessels, lower reliance on overseas insurers and help build domestic underwriting expertise in complex marine and protection and indemnity (P&I) risks, according to industry experts.
The Union Cabinet on Saturday approved the creation of a domestic insurance pool ‘Bharat Maritime Insurance Pool’ (BMI pool) with a sovereign guarantee of ₹12,980 crore. The move aims to insulate India’s maritime trade from global volatility, reduce dependence on foreign underwriters and ensure uninterrupted risk coverage for Indian shipping.
“In the short term the Pool will bring down costs especially War premiums on Hull and Cargo but it will be a game changer in the Long Run since it will help develop critical expertise in Maritime related insurances,” Gaurav Agarwal, Head – Marine Specialties, Prudent Insurance Brokers, said.
Rishi Mehra, CEO, India and Head of Strategy, Human Capital, Asia Pacific, Aon, said the approval of a Bharat Maritime Insurance pool will provide maritime resilience, cost stability, domestic expertise and economic sovereignty. “By enabling locally underwritten risk capacity, this initiative safeguards our shipping industry against global uncertainties and reinforces confidence in India’s trade corridors.”
The proposed BMI Pool will offer coverage across key segments hull and machinery, cargo, protection and indemnity (P&I), and war risk for Indian-flagged and Indian-controlled vessels, including those operating in conflict-prone waters, according to a government release.
Shielding Trade
India’s maritime sector handles over 70% of trade by volume and nearly 95% by value, but insurance coverage remains largely dependent on global insurers and reinsurers. This dependence became evident during disruptions in key shipping corridors such as the Red Sea, Strait of Hormuz and the Gulf of Oman, when global insurers raised premiums sharply or withdrew coverage, exposing Indian exporters and shipping operators to higher financial and operational risks.
“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 government said.
Freight rates have risen 60–80% since the West Asia conflict began, while war-risk premiums in the Persian Gulf have increased from about 0.005%–0.025% earlier to 0.25%–0.50% in designated high-risk zones.
“We have seen global capacity for war and Maritime risks tighten significantly which has led to both pricing volatility and in same case lack of cover,” Amit Goel, Director, Equirus Raghnall Insurance Broking, said. He added that a sovereign-backed pool would ensure continuity of cover for Indian shipping interests while reducing dependence on overseas markets. “Over time, this could also catalyse the development of domestic underwriting expertise in complex marine and P&I risks.”
Scaling Capacity
However, Hari Radhakrishnan, Expert, Insurance Brokers Association of India (IBAI), said while the creation of a domestic maritime insurance pool was long overdue, the sovereign guarantee of $1.4 billion and underwriting capacity of ₹950 crore is inadequate.
Radhakrishnan said a Very Large Crude Carrier (VLCC) can carry upto 2 million barrels of crude which at today’s value of crude at around $100 to a barrel will be $200 Million or ₹1,900 Crores. “If the capacity is on a per vessel basis, then there is nothing left to cover the hull and P&I risks after insuring the cargo, which in itself cannot be fully insured.”