Amid rising risks to shipping operations because of the escalating tensions in the Middle East, the Department of Financial Services (DFS) formally inaugurated India’s domestic insurance pool, that is, the Bharat Maritime Insurance Pool (BMIP) which holds a sovereign guarantee of ₹12,980 crore that seeks to accord a continuous stream of maritime insurance coverages.

The pool would cover all risks associated with maritime operations as hull and machinery, cargo, protection and indemnity (P&I) and war risk for Indian-flagged vessels, those owned by India and having either their destination or origin in India.

The Union Cabinet had accorded their approval for setting up of the Maritime Insurance Pool April 18 this year.

It had observed increased geopolitical instability had impacted maritime trade, translating to increased insurance costs and uncertainty in continued availability of insurance. The Cabinet had also made not a “high dependence of Indian vessels” on International Group of Protection and Indemnity (IGP&I) for P&I insurance that covers for cargo damage, crew injury and repatriation and collision liabilities, among other things.

BMIP would service claims of up to $100 million utilising its own capacity, that is, without any help from the government and by the insurers in the pool themselves. However, should it exceed $100 million, the sovereign guarantee would be invoked to service claims as a “contingent backstop of last resort” after the pool’s accumulated reserves have been exhausted, alongside the individual contribution from members and reinsurance arrangements.

At the inauguration, DFS Secretary M. Nagaraju handed over the first marine hull and machinery war policy document to Hoger Offshore and Marine Private Ltd. This was issued by New India Insurance. Further, a marine cargo war policy was presented to Vedanta Sterlite Copper, covering import of cable wires whilst another was extended to Balrampur Chini Mills Limited.’