New Delhi: The Union Cabinet on Saturday approved the proposal for the creation of a domestic insurance pool, namely ‘Bharat Maritime Insurance Pool’ (BMI pool) with a sovereign guarantee of Rs 12,980 crore to facilitate continuous maritime insurance coverages, according to an official statement.
The statement said the Domestic Insurance Pool addresses global volatility, geopolitical instability and reduces the external insurance dependency of Indian vessels.
“The pool covers all maritime risks like Hull and Machinery, Cargo, P&I and War risk. It covers vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors,” it added.
The statement said the pool will ensure that Indian trade continues to have access to affordable insurance for vessels carrying cargo from any international origin to Indian ports and vice-versa, even when transiting volatile maritime corridors.
Addressing reporters after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said, “Bharat Maritime Insurance Pool will cover India-flagged vessels, India-controlled vessels … it will cover 10 years period.”
“Our dependency on foreign insurance companies will reduce, and we will also save foreign exchange outgo,” he added.
With increased global volatility and geopolitical instability, maritime trade has been impacted with increased risk of losses for cargo and vessels resulting in increased insurance costs and uncertainty in continuous availability of insurance.
Further, there is high dependence of Indian vessels on International Group of Protection and Indemnity (IGP&I) Club for P&I insurance covering third-party liabilities like Oil pollution liability, Wreck removal, Cargo damage, Crew injury and repatriation, Collision liabilities and so on.
Accordingly, the statement said 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.
“In the above backdrop, the government has approved formation of ‘Bharat Maritime Insurance Pool’ (BMI pool) for Indian flagged or controlled vessels or vessels destined to or starting from India, backed by a sovereign guarantee,” it said.
The policies will be issued by insurers that are Pool members, using the combined underwriting capacity of the Pool, which would be around Rs 950 crore.
The statement said that the Pool will help to manage liability insurance locally, tailored to Indian Shipping conditions and regulatory requirements, develop specialised Marine underwriting, claims management and legal expertise within India.
Further, it said a Governing Body Constituted for this pool would oversee the formation and functioning of the pool.
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.
