Indian government approves $1.4 billion maritime insurance pool

India's cabinet has approved a marine reinsurance pool backed by a sovereign guarantee of Indian rupees 12,980 crore ($1.4 billion), to reduce dependence on foreign reinsurers for coverage of India-flagged vessels.

IMAGE: Indian Port of Mudra in Gujarat. Youtube of Adani Ports

The move comes as several major reinsurers, including Indian state-backed reinsurer GIC Re, have either withdrawn war-risk coverage or sharply raised premiums for vessels entering Iranian waters and the wider Persian Gulf amid heightened security concerns.

Reinsurers act as insurers for insurance companies, helping them mitigate the risk.

“… 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,” the government said.

Without war-risk cover, ships operating in areas of active conflict face sharply higher risk premiums, additional security requirements and potential exposure to losses typically excluded from standard marine insurance policies.

A sharp repricing and the withdrawal of war-risk insurance cover could discourage commercial ships from transiting one of the world’s most critical energy corridors.

The pool will cover all maritime risks, including hull and machinery, cargo and war risk.

Insurance policies will be issued by member insurers, drawing on a combined underwriting capacity of around Rupees 950 crore ($101 million).

“The pool ensures 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,” the statement said.

The government has not yet disclosed operational details, eligibility criteria for vessels, or a timeline for deployment.

By Konica Bhatt

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