The Union Cabinet, chaired by Prime Minister Narendra Modi, on Saturday approved the creation of the Bharat Maritime Insurance Pool (BMI Pool), a domestic maritime insurance mechanism backed by a sovereign guarantee of Rs 12,980 crore.
The move is aimed at ensuring uninterrupted and affordable maritime insurance coverage for Indian trade amid rising geopolitical tensions, sanctions risks and global shipping disruptions.
According to an official statement issued by the Press Information Bureau, the BMI Pool will provide insurance support to vessels carrying cargo to and from India, including ships transiting through volatile maritime routes.
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The government said the decision comes against the backdrop of heightened global uncertainty, which has driven up insurance premiums and increased the risk of coverage disruptions for ships and cargo.
“Accordingly, there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in face of withdrawal of coverage due to sanctions or due to geopolitical tensions,” the government said.
The proposed pool will cover a broad range of maritime risks, including hull and machinery, cargo, protection and indemnity (P&I), and war risk insurance.
The BMI Pool will cater to:
- Indian-flagged vessels
- Indian-controlled vessels
- Ships carrying cargo to or from India
The government said the insurance policies will be issued by member insurers using the pool's combined underwriting capacity, estimated at around Rs 950 crore.
India currently relies heavily on international insurers, especially the International Group of Protection and Indemnity Clubs, for P&I coverage. Such insurance typically covers third-party liabilities, including oil pollution, wreck removal, cargo damage, crew injury and collision liabilities.
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The government said the new pool would help India develop domestic expertise in marine underwriting, claims management and legal processes while also reducing dependence on foreign insurers.
“The rationale for providing a sovereign guarantee to the proposed domestic insurance entity is rooted in the objectives of strengthening self-reliance, sanctions resilience and ensuring greater sovereign control,” the government said.
The Bharat Maritime Insurance Pool will initially operate for 10 years, with the option to extend it up to 15 years.
Among the key expected benefits are:
- Continuity of insurance coverage during global crises
- Lower dependence on foreign insurers
- Reduced foreign exchange outgo on insurance premiums
- Greater ability to secure reciprocal coverage arrangements with non-IG insurance clubs
The move comes as shipping routes across West Asia remain vulnerable to conflict-related disruptions, leading insurers to approve coverage on a case-by-case basis and significantly raise premium costs.
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