Maritime insurance scheme approved to protect India's shipping, trade
What's the story
The Indian government has approved the establishment of a new maritime insurance scheme, the Bharat Maritime Insurance Pool (BMI Pool). The Union Cabinet, led by Prime Minister Narendra Modi, approved the initiative yesterday. With a sovereign guarantee of ₹12,980 crore, the scheme aims to provide comprehensive maritime insurance coverage and shield Indian shipping and trade from geopolitical disruptions.
Coverage details
BMI Pool will cover all maritime risks
The BMI Pool will operate for an initial period of 10 years, with a five-year extension option. It will offer insurance support to Indian-flagged vessels, Indian-controlled ships, and those carrying cargo to or from India. The scheme covers all maritime risks such as hull and machinery, cargo protection and indemnity (P&I), war risk insurance among others.
Risk mitigation
Response to rising geopolitical tensions, global insurance premium surge
The establishment of the BMI Pool comes as a response to rising geopolitical tensions, sanctions risks, as well as shipping disruptions that have increased global insurance premiums. The government said India's dependence on international insurers such as the International Group of Protection and Indemnity Clubs for essential maritime cover had left Indian trade vulnerable to sudden withdrawal of coverage due to sanctions or conflict.
Forex
Scheme to reduce foreign exchange spent on premiums
The government also said that the BMI Pool will help India develop its own expertise in marine underwriting, claims management, and also legal processes. This would also lower the amount of foreign exchange spent on insurance premiums. The policies under this scheme will be issued by member insurers with a combined underwriting capacity of around ₹950 crore.