New Delhi: The Bharat Maritime Insurance Pool (BMIP), launched in May to ensure uninterrupted insurance coverage for Indian-flagged and -controlled ships amid rising geopolitical risks, has underwritten risks worth more than ₹40,000 crore, according to two people aware of the development.
The pool has issued over 500 policies, largely covering war-related maritime risks, including hull and machinery, cargo and protection and indemnity.
The rapid uptake reflects strong demand from Indian shipowners and maritime companies seeking reliable and competitively priced insurance amid continued uncertainty in key global shipping routes.
“…given the changing geopolitical landscape, Indian insurers stepping into this space was the need of the hour, and hence the BMIP with substantial government backing is a step in the right direction,” said Vivek Iyer, partner and regulatory ecosystem leader, Grant Thornton Bharat Llp.
The Union cabinet on 18 April approved the creation of the BMIP with a sovereign guarantee of ₹12,980 crore.
Emergency measure
The BMIP was conceived in response to repeated disruptions to international shipping caused by geopolitical tensions in the Red Sea, the Strait of Hormuz and parts of West Asia, where war-risk insurance premiums had surged sharply.
Indian shipping companies, which largely depended on overseas insurers and reinsurers for specialized marine cover, faced significantly higher costs and uncertainty in obtaining adequate protection for vessels and cargo operating in high-risk waters.
The pool, formally launched by the department of financial services in May, brings together 23 insurance and reinsurance companies to create a domestic mechanism for underwriting complex marine risks while reducing dependence on overseas insurance markets.
Under the current structure, participating insurers and reinsurers collectively provide underwriting capacity for claims of up to about $100 million through their own resources and reinsurance arrangements.
The sovereign guarantee acts as a backstop for catastrophic losses beyond the pool’s commercial capacity, ensuring continuity of cover during extreme events.
A 12 May statement said that a governing body had been constituted to oversee the pool’s operations, including the approval of the invocation of the sovereign guarantee. It added that an underwriting committee had been formed to ensure prudent, consistent and technically sound underwriting of risks ceded to the pool. GIC Re is the pool administrator and will submit returns, details of reinsurance arrangements, and performance statements for the pool.
“Policies will be issued by domestic insurers that are pool members, using the combined underwriting capacity of the pool. These risks would then be reinsured by all pool members, in proportion to their capacity commitment in the pool,” said the statement.
The statement added that the pool would service claims of up to $100 million using its own capacity. For claims exceeding $100 million, the sovereign guarantee would be invoked as a contingent backstop of last resort, but only after the pool’s accumulated reserves, member contributions and reinsurance arrangements had been fully exhausted.
Mint’s queries emailed to the ministry of finance, the ministry of ports, shipping and waterways, and GIC Re remained unanswered.