Why in news?
On 18 April 2026 the Union Cabinet approved the creation of the Bharat Maritime Insurance Pool (BMI Pool) with a sovereign guarantee of ₹12,980 crore (about US$1.4 billion). The domestic pool aims to ensure continuous insurance coverage for Indian shipping during periods of geopolitical instability, sanctions or war when foreign insurers withdraw.
Background
Maritime insurance is dominated by international Protection and Indemnity (P&I) clubs based in Europe. These clubs provide liability coverage for oil pollution, wreck removal, crew injury and other risks. During recent conflicts and sanctions some reinsurers stopped covering ships sailing through high‑risk zones like the Red Sea and Persian Gulf, causing premiums to spike and threatening trade. India depends on imports of crude oil and other commodities; disruptions to maritime insurance could halt shipments.
A domestic pool allows Indian insurers to share risks and offer policies for ships flying the Indian flag, vessels controlled by Indian companies and ships entering or leaving Indian ports. Government support reduces the risk for insurers and ensures claims are paid even when losses are large.
Features of the BMI Pool
- Covers a wide range of risks including hull and machinery damage, cargo loss, protection and indemnity, and war risk.
- Policies will be issued by member insurers using their combined underwriting capacity (around ₹950 crore). The sovereign guarantee will cover larger claims beyond this amount.
- Provides insurance to vessels regardless of the origin of cargo as long as India is the starting point or destination. Coverage also applies when vessels transit through volatile maritime corridors.
- A governing body will oversee the pool’s formation and functioning. The initiative aims to develop specialised marine underwriting and claims expertise within India.
Advantages
The pool reduces dependence on foreign insurers and reinsurance markets, helping to maintain shipping operations during crises. It also lowers foreign exchange outflow on insurance premiums and enhances India’s sovereignty over its maritime trade.
Sources: The Hindu