‘Bharat Maritime Insurance Pool’: A Major Initiative to Empower Maritime Trade

  • The Union Cabinet, chaired by the Prime Minister, recently took a significant decision by approving the formation of the ‘Bharat Maritime Insurance Pool’ (BMI Pool). Under this scheme, a sovereign guarantee of ₹12,980 crore will be provided, aimed at ensuring continuous and affordable maritime insurance coverage for Indian trade.

Background

  •       India’s maritime sector handles over 70% of trade by volume and ~95% by value.
  •       Heavy dependence on foreign insurers and International P&I Clubs.

Recent disruptions in Red Sea, Strait of Hormuz, and Gulf of Oman exposed risks:

  •        Sharp rise in insurance premiums
  •       Withdrawal of coverage in conflict zones
  •       Highlighted the need for a domestic, sovereign-backed insurance mechanism

BMI Pool

  •      It is a domestic insurance mechanism designed to reduce external dependency and effectively manage maritime risks.
  •      It will cover all major maritime risks, including Hull & Machinery, Cargo, Protection & Indemnity (P&I), and War Risks.
  •       It will apply to ships flying the ‘Indian Flag’ (or controlled by Indian entities) and vessels calling at or departing from Indian ports—even those operating in volatile maritime corridors.
  •       It will operate through member insurers possessing a combined underwriting capacity of approximately ₹950 crore.
  •       It will be administered under the oversight of a Governing Body.

Need for a Domestic Insurance Pool

  •       Global Challenges: Rising geopolitical instability and global volatility have heightened the risks associated with maritime trade, leading to uncertainty in premium rates.
  •       External Dependency: There is a heavy reliance on the ‘International Group of Protection & Indemnity (IGP&I) Clubs’ for P&I insurance coverage.
  •       Coverage Scope: This includes liabilities related to oil pollution, wreck removal, cargo damage, crew injury and repatriation, as well as collision liabilities.

Strategic Significance

  •       Economic Stability: It safeguards against sudden spikes in insurance premiums and ensures predictability in logistics and trade costs.
  •       Trade Security: It enables vessels to continue operating even within volatile maritime corridors.
  •      Self-Reliance and Sovereignty: It reinforces the ‘Atmanirbhar Bharat’ (Self-Reliant India) initiative within the insurance sector and builds domestic capacity in maritime underwriting, claims management, and legal expertise.

Global Best Practices

  •        Similar frameworks currently exist in the UK, Japan, and South Korea.

  •       This initiative aligns with the ‘Maritime India Vision 2030’.