Policy Update
Shiva Karthik
Background
India’s maritime sector plays a vital role in the country’s international trade, with the majority of its cargo and energy supplies transported through sea routes. As maritime trade expands, ensuring uninterrupted shipping operations has become increasingly important for India’s economic stability and energy security. However, India’s dependence on foreign insurance providers, particularly for Protection and Indemnity (P&I) coverage, has exposed its maritime sector to external vulnerabilities.
According to the Ministry of Finance, restrictions or withdrawal of insurance coverage in high-risk areas and sanctioned environments can disrupt shipping operations and critical trade flows. Foreign insurers and reinsurers may withdraw their support for vessels or cargo associated with sanctioned countries, creating uncertainty for Indian shipowners and exporters. Further, India’s reliance on international P&I clubs for third-party liabilities, including oil pollution, wreck removal, cargo damage and crew injuries, highlights the limited domestic capacity in this area.
The geopolitical tensions in West Asia, for example, in April 2026, two Indian-flagged oil tankers were attacked by gunfire while attempting to cross the Strait of Hormuz have further underscored these vulnerabilities, increasing the need for reliable and uninterrupted maritime insurance coverage. In this context, the Bharat Maritime Insurance Pool (BMIP) was established to strengthen domestic maritime insurance capacity, reduce dependence on foreign insurance markets and ensure continuity of India’s maritime trade even during geopolitical disruptions and international sanctions.
Introduction
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the creation of the Bharat Maritime Insurance Pool (BMIP) on 18 April 2026, with a sovereign guarantee of ₹12,980 crore to facilitate continuous and affordable maritime insurance coverage. Subsequently, the Department of Financial Services (DFS), Ministry of Finance, formally launched the pool on 12 May 2026, with a total financial support framework of ₹13,906.50 crore (USD 1.5 billion) per loss/event. This comprises an aggregate member capacity of USD 100 million and a sovereign guarantee of USD 1.4 billion (₹12,980 crore). The initiative seeks to strengthen India’s domestic maritime insurance capacity and provide financial protection to Indian maritime trade against global uncertainties. (PIB- Bharat Maritime Insurance Pool (2026)
The BMIP provides insurance coverage across four major categories and it covers Indian-flagged vessels, vessels owned, managed or controlled by Indian entities, and cargo vessels destined for or originating from Indian ports. By facilitating domestic insurance coverage through participating Indian insurers, the initiative aims to reduce dependence on foreign insurance providers, strengthen sovereign control over maritime risks and ensure continuity of trade during geopolitical disruptions.
Functioning
The Bharat Maritime Insurance Pool (BMIP) has been designed as a domestic, sovereign-backed insurance mechanism to provide coverage against major maritime risks. It has an overall insurance capacity of ₹13,906.50 crore (USD 1.5 billion), supported by a sovereign guarantee of ₹12,980 crore (USD 1.4 billion). The pool covers four major categories of maritime risks: Hull and Machinery, Cargo, Protection and Indemnity (P&I), and War Risks. It is available to Indian-flagged vessels, vessels owned, managed or controlled by Indian entities, and cargo vessels destined for or originating from India. The pool has an initial duration of 10 years, which may be extended up to 15 years.
Hull and Machinery: Covers physical damage to the ship and its machinery.
Cargo Insurance: Covers loss or damage to goods transported by sea.
Protection and Indemnity (P&I): Covers third-party liabilities, including injury, pollution, and damage to other vessels.
War Risks: Covers losses caused by war, piracy, terrorism, and other war-related dangers.
Structure and Administration: The General Insurance Corporation of India (GIC Re) serves as the Pool Administrator and manages its day-to-day operations. It is also responsible for submitting performance reports and details of reinsurance arrangements. A Governing Body oversees the functioning of the pool, including decisions relating to the invocation of the sovereign guarantee. An Underwriting Committee has also been established to ensure prudent, consistent and technically sound assessment of maritime risks covered under the pool.
Functioning and Risk-Sharing Mechanism: Policies are issued by domestic insurance companies that are members of the pool, using the combined underwriting capacity of all participating members. The risks covered under these policies are subsequently reinsured collectively by all pool members in proportion to their respective capacity commitments. This enables participating insurers to share the financial burden of large maritime risks.
Claims Settlement Mechanism: Claims up to USD 100 million are serviced using the pool’s own capacity. For claims exceeding USD 100 million, the sovereign guarantee acts as a contingent backstop of last resort. It can be invoked only after the exhaustion of the pool’s accumulated reserves, member contributions and reinsurance arrangements.
Performance
Since BMIP was launched recently, its performance is still at an early stage. Its initial progress can be understood through the policies issued and the expansion of insurance coverage across different maritime risks.
The first Marine Hull and Machinery War Policy was issued by New India Assurance Company Limited to Hoger Offshore and Marine Private Limited on 12 May 2026, providing protection against specified war-related risks in high-risk maritime zones. A Marine Cargo War Policy was also presented to Vedanta Sterlite Copper Limited, covering its import of cable wires into India. Additionally, a policy was issued to Balrampur Chini Mills Limited, demonstrating the pool’s potential to extend coverage beyond the shipping industry.
On 30 July 2026, the Department of Financial Services introduced the first Protection and Indemnity (P&I) insurance product under BMIP. The first P&I policy was issued by New India Assurance Company Limited to the Shipping Corporation of India Limited, extending coverage to third-party maritime liabilities. By 29 July 2026, the pool had issued 1,608 policies covering Cargo War and Hull War risks. (PIB- Bharat Maritime Insurance Pool (2026)
The pool continued to expand its insurance coverage in the months following its launch. By 7 September 2026, it had issued 3,000 Cargo War-risk policies, 92 Hull War-risk policies and 3 Protection and Indemnity (P&I) policies. During this period, war-risk insurance premiums had also declined by approximately 35-40% from their peak during the West Asia conflict. These developments reflect the expansion of BMIP’s insurance coverage and the growing availability of domestic maritime insurance options. Its longer-term impact on reducing dependence on foreign insurers will become clearer with continued operations. (PIB- Bharat Maritime Insurance Pool (2026)
Impact
The Bharat Maritime Insurance Pool (BMIP) is expected to strengthen India’s maritime insurance capabilities by reducing dependence on foreign insurance providers and ensuring continuity of insurance coverage during geopolitical disruptions. It provides Indian maritime stakeholders with a domestic insurance mechanism, particularly when international insurers or reinsurers restrict or withdraw coverage due to conflicts or sanctions. This helps strengthen India’s control over maritime trade and reduces its exposure to uncertainties in global insurance markets.
The pool also contributes to the development of domestic expertise in specialised marine underwriting and claims management, areas in which India previously depended heavily on foreign insurance markets. By enabling Indian insurers to cover higher-value maritime risks, BMIP supports the growth of indigenous insurance capabilities and helps retain a greater share of maritime insurance activity within the domestic economy.
Its benefits also extend beyond shipping companies to importers, exporters, manufacturers and other businesses involved in maritime trade. The policies issued to Vedanta Sterlite Copper Limited and Balrampur Chini Mills Limited demonstrate the potential of the pool to support the wider industrial and trade ecosystem. Overall, BMIP strengthens India’s maritime risk-protection framework and contributes to greater financial and maritime resilience. (PIB- Bharat Maritime Insurance Pool (2026)
Key Challenges
1. Dominance of International P&I Clubs: India’s dependence on 13 International Group P&I Clubs, which insure around 90% of the world’s large ships, makes it challenging for BMIP to establish itself as a competitive domestic alternative.
2. Limited Domestic Marine Insurance Expertise: Building specialised expertise in complex marine underwriting, risk assessment and claims management remains a major challenge, given India’s historical dependence on foreign insurance markets.
3. Geopolitical and Sanctions-related Risks: Sudden withdrawal of international reinsurance support due to geopolitical conflicts or sanctions could expose the pool to substantial financial risks.
4. Managing Catastrophic Claims: Ensuring sufficient domestic financial and reinsurance capacity to meet exceptionally large maritime claims, while limiting dependence on the sovereign guarantee, remains a critical challenge.
Way Forward
1. Ensuring Credible Operations and Competitive Pricing: BMIP must maintain efficient operations, offer competitive insurance premiums and ensure reliable and timely claims settlement. This will help build confidence among Indian shipowners, exporters and other maritime stakeholders.
2. Strengthening Domestic Institutional Capacity: Develop specialised human resources in marine underwriting, risk assessment and claims management. Strengthening legal frameworks and expanding reinsurance partnerships will also improve the pool’s ability to manage complex maritime risks while minimising dependence on sovereign backing.
3. Enhancing Financial Sustainability: Gradually strengthen the pool’s reserves and domestic underwriting capacity to manage high-value maritime risks and reduce the need to invoke the sovereign guarantee.
4. Establishing Regional Leadership: In the long term, develop BMIP as a regional anchor for maritime insurance in the Indian Ocean Region, positioning India as a provider of maritime financial services and a contributor to international maritime risk standards.
Conclusion
The Bharat Maritime Insurance Pool marks a significant step towards securing India’s maritime interests and strengthening its strategic autonomy amid evolving geopolitical uncertainties. By establishing a robust domestic maritime insurance framework, BMIP aims to safeguard the continuity of India’s maritime trade against geopolitical tensions, international sanctions and disruptions in global insurance markets. It also strengthens the foundation for indigenous expertise, institutional capacity and resilience in the maritime insurance sector. Its effective implementation and long-term sustainability can position India as a regional leader in maritime insurance, contributing to a secure, self-reliant and globally competitive maritime sector in the journey towards Viksit Bharat @2047.
References
- Directorate General of Shipping, Ministry of Ports, Shipping and Waterways. (2026, June 5). Explanatory Note on the Bharat Maritime Insurance Pool (BMIP): Securing India’s Maritime Trade. Government of India. https://dgma.gov.in/download/1781517244_6a2fcbbc219f8_bmip-note.pdf?utm_source=chatgpt.com
- Ministry of Finance, Government of India. (2026, April 18). Cabinet Approval for Bharat Maritime Insurance Pool. Press Information Bureau. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2253243&lang=2®=48&utm_source=chatgpt.com
- Ministry of Finance, Government of India. (2026, May 12). Launch of Bharat Maritime Insurance Pool. Press Information Bureau. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2260413&lang=1®=3&utm_source=chatgpt.com
- Press Information Bureau. (2026, August 12). India’s Infrastructure Transformation: From Connectivity to Capacity. Government of India. https://www.pib.gov.in/FactsheetDetails.aspx?Id=150842&lang=10®=23&utm_source=chatgpt.com
- Press Information Bureau, Government of India. (2026, September 27). Bharat Maritime Insurance Pool: Strengthening India’s Maritime Sovereignty. Ministry of Information and Broadcasting. https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=160181&lang=1®=3&utm_source=chatgpt.com
About the Author
Chidaraboyana Shiva Karthik is a UPSC Civil Services aspirant pursuing a Master’s degree in Economics at IGNOU, with an interest in public policy and governance. He holds professional certifications from Harvard, IIM Bangalore, SDG Academy and IBM, and serves as a Research and Editorial Intern at IMPRI.
Acknowledgement
I would like to express my sincere gratitude to IMPRI (Impact and Policy Research Institute) for giving me the opportunity to work as an intern and write on such an important topic. I would also like to acknowledge the official MeitY and IndiaAI Mission for making authentic data available on the PIB Portal that helped me to complete this article.
Disclaimer
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of IMPRI (Impact and Policy Research Institute) or any other affiliated organisation. The information presented in this article is based on publicly available government sources and is intended solely for academic and research purposes.
Reviewed by: Mahenoor Imam, Aditi Bhuinyan
