Explainer: Why India Approved Rs 13K-Crore Maritime Insurance Pool

India’s Cabinet, chaired by Prime Minister Narendra Modi, on Saturday (April 18, 2026), approved a proposal for the creation of a domestic insurance pool, to be called the ‘Bharat Maritime Insurance Pool’ (BMI Pool) with a sovereign guarantee of Rs 12,980 crore to facilitate continuous maritime insurance coverages.

Why did India create the BMI Pool?

The BMI Pool comes at a time when maritime trade has faced severe constraints in view of the ongoing West Asian war, and the resulting hike in insurance premiums for cargo traffic through the troubled waters.

“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 Indian government said in a statement on the cabinet decision.

What is the rationale for creating BMI Pool?

With increased global volatility and geopolitical instability, maritime trade has been impacted with increased risk of losses for cargo and vessels, resulting in increased insurance costs and uncertainty in the continuous availability of insurance.

Further, Indian vessels are highly dependent on the International Group of Protection and Indemnity (IGP&I) Club for P&I insurance covering third-party liabilities like oil pollution liability, wreck removal, cargo damage, crew injury and repatriation, collision liabilities, and so on.

Accordingly, there was a need for a domestic maritime risk coverage pool to maintain sovereignty and continuity of trade in the face of withdrawal of coverage due to sanctions or due to geopolitical tensions.

How does BMI Pool work?

Against that backdrop, the Indian government approved the formation of ‘Bharat Maritime Insurance Pool’ (BMI pool) for Indian flagged or controlled vessels or vessels destined to or starting from India, backed by a sovereign guarantee.

The pool would cover all maritime risks like hull and machinery, cargo, P&I, and war risk. The policies will be issued by insurers that are pool members, using the combined underwriting capacity of the pool, which would be around Rs. 950 crore.

How does BMI Pool help the Indian trade?

The pool will help to manage liability insurance locally, tailored to Indian shipping conditions and regulatory requirements, develop specialised marine underwriting, claims management, and legal expertise within India.

Further, a Governing Body constituted for this pool would oversee the formation and functioning of the pool, the Indian government said.

The rationale for providing a sovereign guarantee to the proposed domestic insurance entity is rooted in the objectives of strengthening self-reliance, sanctions resilience, and ensuring greater sovereign control.

What triggered the government on BMI Pool?

Several major reinsurers, including India’s only state-backed reinsurer GIC Re, have either withdrawn cover or sharply raised premiums, leaving the industry with limited reinsurance support.

Reinsurers provide vital support to insurers by helping them spread risk. Among issues leading the industry to scale back coverage are the West Asian war and the Western sanctions on Russia.