The Department of Financial Services (DFS), Ministry of Finance, on Tuesday, 12 May launched the Bharat Maritime Insurance Pool (BMIP) — a dedicated domestic maritime insurance mechanism with a total underwriting capacity of $1.5 billion and a sovereign guarantee support of $1.4 billion (approximately ₹12,980 crore). The initiative is designed to protect Indian-flagged and Indian-controlled vessels, as well as ships carrying cargo to and from India, in high-risk and war-prone zones where global insurers may withdraw coverage due to sanctions or geopolitical uncertainty.

What the BMIP Covers

The pool will underwrite a broad spectrum of maritime risks: Hull and Machinery insurance, Cargo insurance, Protection and Indemnity (P&I) insurance, and War Risk insurance. P&I insurance typically covers liabilities arising from oil pollution, wreck removal, cargo damage, crew injuries, collision liabilities, and repatriation expenses.

The launch event was chaired by DFS Secretary M. Nagaraju, who handed over the first Marine Hull & Machinery War Policy issued under the BMIP framework to M/s Hoger Offshore and Marine Private Limited. The policy was issued by The New India Assurance Company Limited and provides financial protection against war-related risks in high-risk maritime regions. A Marine Cargo War Policy was also presented to Vedanta Sterlite Copper Limited for the import of cable wires, and another policy was issued to Balrampur Chini Mills Limited.

How the Pool Will Operate

Under the framework, domestic insurers participating in the pool will issue policies using the combined underwriting capacity of the BMIP. Risks will then be reinsured among pool members in proportion to their committed capacities. State-owned reinsurer General Insurance Corporation of India (GIC Re) has been appointed as the pool administrator, overseeing reporting, reinsurance arrangements, and operational performance.

Claims up to $100 million will be serviced through the pool's own resources — including reserves, member contributions, and reinsurance arrangements. For claims exceeding $100 million, the sovereign guarantee mechanism will act as a contingent backstop after the exhaustion of all available pool resources.

Governance and Oversight

To ensure prudent risk management, the government has constituted a Governing Body to supervise the pool's functioning, including approvals related to invocation of the sovereign guarantee. An Underwriting Committee has also been established to ensure technically sound and consistent underwriting practices across pool members.

Reducing Dependence on Global Insurance Markets

Officials said the BMIP would reduce India's dependence on international insurance markets — particularly the International Group (IG) P&I Clubs, which currently dominate third-party maritime liability coverage globally. This comes amid growing concerns that geopolitical conflicts and sanctions can prompt foreign insurers and reinsurers to suspend or withdraw coverage for vessels or cargo linked to sensitive regions, including the Red Sea and Persian Gulf corridors critical to India's energy and trade flows.

Notably, this is a direct policy response to the disruptions Indian shipping faced during the escalation of the Israel-Gaza conflict and Houthi attacks on commercial vessels in the Red Sea from late 2023, which drove up war-risk premiums sharply and left several Indian-linked vessels with limited coverage options. With the BMIP now operational, India joins a small group of nations — including China and members of the European Union — that maintain sovereign-backed maritime insurance pools. The framework's long-term test will be its claims-servicing capacity during an actual high-intensity conflict scenario.