Global reinsurers often cancel war-risk cover in conflict zones, as seen during the ongoing Iran war. The Bharat Maritime Insurance Pool (BMIP) is India’s strategic response to ensure continuity of cover for Indian vessels when international markets withdraw or premiums become prohibitively expensive, said Hitesh Joshi, officiating chairman-cum-managing director of General Insurance Corporation of India (GIC Re).
In an emailed interview with Mint, Joshi said that recent disruptions in key maritime chokepoints have repeatedly exposed the vulnerability of Indian shipping, prompting the government to launch the ₹12,980-crore sovereign-backed Bharat Maritime Insurance Pool and reduce India’s dependence on volatile global insurance markets.
Global reinsurers and International Group of P&I Clubs have a track record of issuing cancellation notices for war-risk covers during conflict zones, leading to sudden unavailability of cover or sharp spikes in premiums, he said. This creates serious risks for India, one of the world’s largest crude oil importers and a major trading economy.
The International Group of P&I Clubs is a London-based collective of 12 not-for-profit mutual clubs that collectively insure roughly 87% of the world’s ocean-going tonnage.
Domestic capacity
The pool has a domestic capacity of approximately ₹927 crore, which will be fully retained within the Indian insurance market through commitments from both public and private insurers. For high-severity losses, including scenarios where vessels are destroyed or severely damaged in war theatres—potentially running into a billion dollars—the sovereign guarantee kicks in as the ultimate backstop, he said. This takes the total coverage up to ₹13,900 crore, primarily in the P&I segment.
“The pool’s own capacity will respond first and for losses that exceed that capacity, the sovereign guarantee will serve as the ultimate financial backstop. This structure ensures that even catastrophic claims can be supported without disrupting the continuity of cover for Indian shipping and trade” Joshi said.
One of the key benefits is cost. Joshi said that premiums under BMIP are expected to be materially lower than international market rates—potentially by around 25%—due to the sovereign guarantee and steady domestic volumes. These savings will be passed on to shipowners and cargo interests. “This is indeed realistic,” he said.
Emphasizing self-reliance, Joshi stated, “There will not be any need to seek support from global reinsurance partners.” The pool is designed as a fully domestic solution to reduce dependence on external markets, especially during periods of uncertainty. All policies will be issued in Indian currency, eliminating sanctions-related payment risks.
For complex areas like P&I liability assessment—historically dominated by global clubs—GIC Re will follow a phased approach. It will initially focus on coastal vessels to build specialised expertise, develop networks of international maritime service providers, and gradually create a robust domestic P&I ecosystem.
The Bharat Maritime Insurance Pool, managed by GIC Re, will provide war-risk covers for hull & machinery and cargo, along with the full suite of P&I (protection & indemnity) liabilities. Hull & machinery and P&I covers will apply primarily to Indian-flagged or Indian-controlled vessels, while cargo cover will extend to shipments originating from or destined for India. All policies under BMIP will be issued by member insurance companies of the pool. GIC Re has been appointed as the pool manager, responsible for risk aggregation, pricing, claims management, and overall operations, working closely with the underwriting committee.
When asked about success metrics over the next three years, Joshi said success would be the convergence of higher premium retention within India, reduced forex outflow, lower insurance costs for the industry, and enhanced strategic resilience.
He also noted that BMIP will act as a critical enabler for India’s broader maritime self-reliance agenda, supporting shipbuilding, shipping finance, and maritime services by guaranteeing uninterrupted insurance cover even during severe geopolitical shocks. The sovereign guarantee, however, will be used strictly as a last resort for extreme crises that threaten national economic continuity, energy security, or food security.